AT&T Inc. (T - Get Report) shares were indicated higher in pre-market trading Thursday amid reports that it could be preparing to either spin-off its DirecTV business or orchestrate a deal to combine it with Dish Network Corp. (DISH - Get Report)
The Wall Street Journal reported late Wednesday that AT&T, which is currently being pressured to streamline its business and improve profitability by activists investors Elliott Management, is looking at ways in which it can hive DirecTV from its broader portfolio. Reuters, however, cited sources suggesting that regulatory issues would make a combination with Dish Network difficult and that no talks were currently taking place. The Federal government rejected a Dish/DirecTV merger proposal in 2001.
AT&T shares were marked 1.02% higher Thursday to change hands at $37.14 each. Shares in the group have risen more than 2.5% since Elliott first revealed its $3.2 billion stake in the group on September 9 and are up 30% for the year.
Dish Network shares were marked 0.52% higher at 35.76 each, a move that would extend the stock's year-to-date gain to around 44% and value the Englewood, Colorado-based satellite TV operator at just over $18 billion.
AT&T paid $49 for DirecTV in 2015, with an aim to place the satellite TV provider at the heart of the company's new media-focused expansion.
Cheaper online entertainment offerings, however, have meant that AT&T's premium video subscriber losses have topped 1.32 million over the first half of the year, with 168,000 DirecTV Now customers leaving in the second quarter, a rate the company expects to continue over the three months ending in September.
"The pay TV ecosystem has been under immense pressure since the deal closed. In fact, trends are continuing to erode, with AT&T's premium TV subscribers in rapid decline as the industry, particularly satellite, struggles mightily," Elliott wrote in its September 9 letter to the AT&T board. "Unfortunately, it has become clear that AT&T acquired DirecTV at the absolute peak of the linear TV market."