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Sept. 18, 2019, 5:58 p.m. EDT

AT&T considers cutting the cord with its DirecTV unit

Sale or spinoff mulled after activist investor calls for unloading satellite-TV business

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By Shalini Ramachandran and Drew FitzGerald

Patrick T. Fallon/Bloomberg
AT&T acquired DirecTV in 2015 for $49 billion.

AT&T Inc. is exploring parting with its DirecTV satellite unit, people familiar with the matter said, a move that would mark a sharp course correction for the phone giant’s chief executive, Randall Stephenson, after years of bulking up the company into a media conglomerate.

AT&T /zigman2/quotes/203165245/composite T +0.60%   has considered various options, including a spinoff of DirecTV into a separate public company and a combination of DirecTV’s assets with Dish Network Corp. /zigman2/quotes/207505872/composite DISH -4.52%  , its satellite-TV rival, the people said.

AT&T may ultimately decide to keep DirecTV in the fold. Despite the satellite service’s struggles, as consumers drop their TV connections, it still contributes a sizable volume of cash flow and customer accounts to its parent.

AT&T acquired DirecTV in 2015 for $49 billion. The company’s shrinking satellite business is under a microscope after activist investor Elliott Management Corp. disclosed a $3.2 billion stake in AT&T last week and released a report pushing for strategic changes. Elliott has told investors that AT&T should unload DirecTV, The Wall Street Journal has previously reported.

An expanded version of this report appears on WSJ.com.

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