Pioneering satellite TV provider DirecTV is making significant cuts to its workforce.
The El Segundo company, which has been struggling with subscriber losses, alerted employees last week that it was cutting 10% of its management staff — or more than 200 workers. The company employs fewer than 10,000 employees and less than half of those are managers, according to people familiar with the downsizing.
The move comes amid an increasingly challenging landscape for pay-TV providers as programming costs soar and traditional customers scale back.
“The entire pay-TV industry is impacted by the secular decline and the increasing rates to secure and distribute programming,” a DirecTV spokesperson said in a statement. “We’re adjusting our operations costs to align with these changes and will continue to invest in new entertainment products and service enhancements.”
DirecTV has been a private company since mid-2021.
After a disastrous six-year ownership, publicly traded AT&T struck a deal with private equity firm TPG to spin off the satellite TV provider but maintain a stake. As part of the transaction, AT&T took $7.1 billion in cash and 70% interest in the new DirecTV. TPG, which contributed $1.8 billion to the venture, secured 30% of the company and took over day-to-day management. Bill Morrow, a former CEO of Pacific Gas & Electric in San Francisco, became DirecTV’s chief executive.
At the time of the spinoff, AT&T’s television brands, including DirecTV, had nearly 16 million customers.
That total marked a dramatic decline from 2015 when AT&T could boast that it was the nation’s largest pay-TV company with 26 million pay-TV customers. AT&T spent nearly $49 billion, plus debt, for DirecTV, which was an invention of Hughes Aircraft Co.
Just as AT&T took control of DirecTV, consumers began opting for lower-cost streaming services like Netflix.
DirecTV executives have declined to provide updated subscriber numbers.
Challenges abound. Last month, the NFL awarded its Sunday Ticket package to Google Inc.’s YouTube TV beginning next season — after more than 25 years on DirecTV. AT&T decided long ago that it could no longer absorb the financial losses required to carry the Sunday afternoon games to residential customers.
DirecTV has, however, expressed interest in retaining Sunday Ticket rights for commercial outlets, including sports bars.
The seven-year deal, with a reported price tag of $2.5 billion a year to the NFL, underscored the migration of younger viewers to streaming platforms for video viewing as well as technology giants’ ability to upset the status quo. Amazon Prime Video separately took over the package of Thursday night NFL games.
The affected DirecTV employees, including many senior-level executives, were given two weeks’ notice. Most will leave on Jan. 20.
The layoffs were first reported by CNBC.
Not all the employees affected were located in El Segundo. DirecTV has maintained a generous work-from-home policy throughout the pandemic, so employees were scattered around the country, and many were based in Atlanta, where AT&T maintained a hub.
DirecTV had long been known for sterling customer service, but AT&T dismantled that, moving the customer-relations functions into its “shared services” unit that was geared toward dealing with phone service issues. That meant AT&T customer service representatives suddenly had to troubleshoot satellite TV problems over the phone.
Early on, AT&T also offered heavily discounted prices to new satellite TV customers, which boosted DirecTV’s totals — for a couple of years. But, in doing so, the company alienated longtime subscribers who were upset that new customers receiving the same packages were paying a fraction of the price.
