Nielsen Holdings said that it completed its sale to a group of private-equity investors led by Elliott Investment Management and Brookfield Business Partners.

The deal is valued at $16 billion, including the assumption of debt.

The change of control happens at a time when media companies and media buyers are more actively exploring alternatives to Nielsen as currency for buying and selling advertising. A significant number of companies are using big data to measure various aspects of the TV business as it shifts from broadcast and cable to streaming.

Nielsen’s legacy measurement system has been challenged by the transition and malfunctioned during the pandemic, resulting in an undercount of viewing and the suspension of Nielsen’s accreditation by the Media Rating Council. Nielsen is in the process of standing up its new system, Nielsen One, which the company said should be available by the end of the year.

Also: In New Setback, Nielsen Says Its ‘Big Data’ Isn’t Ready for Transacting

“Today’s announcement marks an important milestone for Nielsen,” Nielsen CEO David Kenny said. “We are excited for a bright future as a private company. ”This transaction provides significant value to our shareholders and provides the best conditions to execute on our Nielsen One strategy.”

The ad tech and measurement space has been attracting the interest of investors lately, with buyouts and mergers happening more frequently in the sector. 

Elliott has owned a stake in Nielsen since 2018 and was critical about its financial performance in 2020. Pressure from Elliott led to Nielsen cutting costs and selling its Global Connect business for $2.7 billion in 2021.

“Nielsen is a leader in the media industry,” senior portfolio manager Marc Steinberg and senior managing director Isaac Kim said on behalf of Elliott and Evergreen. "Nielsen created the blueprint for audience measurement, and we believe it is in the best position to be the leader in measurement for the streaming era and to continue to provide value for the new media ecosystem."

“Nielsen is a trusted service provider to its customers,” Brookfield Business Partners managing partner Dave Gregory added. “We look forward to supporting the company's growth as it continues to lay the groundwork for the future of media.” ■

Nielsen Holdings said it has received all of the necessary government regulatory approvals it needs to complete its plan to be acquired by a group of private equity funds led by Elliott Investment Management and Brookfield Business Partners for about $16 billion.

Shareholders will be able to vote on the $28 a share transaction at two meetings set for August 9.

Also Read: Nielsen Reports Higher 2Q Earnings and Revenue

The first meeting will be in England as required by British laws. The second meeting will follow in the U.S. in which shareholders will vote to execute the transaction. Shareholders will also be asked to approve the compensation plan for top Nielsen executives.

Nielsen also said that proxy advisory company Glass, Lewis & Co. recommended that shareholders vote in favor of the transactions. Institutional Shareholder Services, another proxy advisory firm, also came out in favor of the deal for shareholders. ■

Nielsen Holdings reached an agreement to be acquired by a group of private-equity investors led by Elliott Investment Management and Brookfield Business Partners in a deal worth $16 billion, including Nielsen debt.

The deal comes as Nielsen has been under pressure from investors for a falling stock price and by the media industry for its slow response to measuring a more complex media environment in which fewer people are watching traditional TV and more are streaming.

Also: Byron Allen Sues Nielsen Claiming Billion-Dollar Fraud

After rejecting an earlier bid, Nielsen’s board accepted an offer that will pay shareholders $28 a share in cash. The board said this represents a 10% increase over the previous proposition and a 60% premium over Nielsen’s stock price on March 11, before Nielsen’s stock started rising on takeover speculation.

"After a thorough assessment, the board determined that this transaction represents an attractive outcome for our shareholders by providing a cash takeout at a substantial premium, while supporting Nielsen's commitment to our clients, employees and stakeholders,” Nielsen board of directors chair James A. Attwood said. “The Consortium sees the full potential of Nielsen's leadership position in the media industry and the unique value we deliver for our clients worldwide.”

Despite the disruption a takeover might add to the pressure on Nielsen, the company, led by CEO David Kenny, maintains that it is on track to deliver Nielsen One, its new measurement system designed to make all viewing comparable and consistent. 

Also: Nielsen’s David Kenny Fights Back After Accreditation Loss

“After months of deep market analysis, industry diligence and management reviews, we are firmly convinced that Nielsen will continue to be the gold standard for audience measurement as it executes on the Nielsen One roadmap,” managing partner Jesse Cohn and senior portfolio manager Marc Steinberg said on behalf of Elliott and its Evergreen Coast Capital affiliate.

“Having first invested in Nielsen nearly four years ago, we have a unique appreciation for the company's ongoing relevance to the global, digital-first media ecosystem,” they said. “Today’s outcome represents a significant win for Nielsen's shareholders and for the business itself, as our multibillion-dollar investment will help Nielsen reinforce its transformation at this critical inflection point.  We are pleased to partner with David and the existing management team to lead Nielsen after the transaction is completed.”

Also: Nielsen Files Patent Infringement Lawsuit Against TVSquared

The transaction agreement provides for a “go-shop” period, during which Nielsen — with the assistance of its financial advisers, J.P. Morgan and Allen & Co., and its legal advisers — will actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative acquisition proposals. The go-shop period expires in 45 days,

A competing bidder who makes a superior proposal would bear a $102 million — 1% of equity value — termination fee payable by Nielsen if the measurement company terminates the transaction agreement with the consortium to accept another proposal. 

Elliott has owned a stake in Nielsen since 2018 and was critical about its financial performance in 2020. Pressure from Elliott led to Nielsen cutting costs and selling its Global Connect business for $2.7 billion in 2021.

Nielsen has long been criticized by the television industry it measures, but the negative headlines have intensified in the last year.

Nielsen’s accreditation was suspended last September after the Media Rating Council — which reviews media measurement companies — confirmed that Nielsen had been underreporting viewing during the pandemic. The undercount was largely the result of a decline in the number of homes in Nielsen’s sample and the quality of data coming from those homes because Nielsen was unable to monitor those homes in person because of COVID-19.

TV networks complained that the undercount has cost them hundreds of millions of dollars in lost ad revenue. With Nielsen unaccredited, networks have been more aggressive in seeking alternate measurement companies. NBCUniversal announced that it would do some deals based on data from iSpot.TV. Other media companies, including Paramount and WarnerMedia, are also testing alternate currencies using data from Comscore and VideoAmp for buying and selling advertising.

 Also: Xandr To Use 605 Exchange as Currency For Data-Driven Linear Buys 

Nielsen has been eager to regain accreditation from the MRC. Last week, the MRC said it expects its audit of Nielsen’s national and local ratings services to last through the third quarter, after the upfront ad market takes place. ■

The Super League may not yet be a stone cold reality, but the proposal to band together 20 of the top European soccer clubs could generate billions of dollars in rights fees for football clubs across the pond, potentially attracting several major cable networks and broadcasters to compete for TV rights to the games. 

The idea of a Super League has been around for several months and for some, it was merely a negotiating tool for the top clubs to squeeze more cash or concessions from European soccer’s governing body, the UEFA. But this time around, the league has actual participants -- about 12 clubs including six of England’s most powerful clubs (Manchester United, Manchester City, Arsenal, Chelsea, Liverpool and Tottenham) and three each from Spain (Real Madrid, Atletico Madrid and Barcelona) and Italy (Juventus, AC Milan and Internazionale). Super League expects to expand to at least 20 clubs, separated into two pools of 10 teams. 

Also Read: CBS Sports Snags U.S. English-Language Rights to Concacaf Soccer

While fans have come out against the creation of the league as serving greedy ownership thumbing their collective noses at tradition, the motivation behind the Super League seems pretty simple -- money and opportunity. The Champions League has 32 teams, all which qualify based on the previous season’s results. The Super League would have 15 permanent members -- three more teams are expected to sign on shortly -- with the remaining five qualifying on merit.

Super League clubs would play mid-week games and technically would be allowed to continue to play in their domestic leagues, but would leave the Champions League, which on Monday expanded its format to 36 teams, increasing the number of guaranteed games the clubs play as well as their TV exposure. 

European soccer’s governing bodies were swift to condemn the new league.

Also Read: Live Sports Events are Moving to Streaming 

In a joint statement, the UEFA, the English Football Association and the Premier League, the Royal Spanish Football Federation (RFEF) and LaLiga, and the Italian Football Federation (FIGC) and Lega Serie A said they “will remain united in our efforts to stop this cynical project, a project that is founded on the self-interest of a few clubs at a time when society needs solidarity more than ever.”

The governing bodies continued that they would consider all legal and sporting measures available to them to stop the formation of the Super League, and warned that the clubs that join the upstart organization would be banned from playing in any other competition at a domestic, European or world level, and their players could be denied the opportunity to represent their national teams.

“We call on all lovers of football, supporters and politicians, to join us in fighting against such a project if it were to be announced,” the leagues said. “This persistent self-interest of a few has been going on for too long. Enough is enough.”

Also Read: Sports and OTT: Streaming Could Squeeze Last Vestige of Appointment TV 

But the UEFA et al, seem to be missing two key points: European soccer clubs are starving for money and an increasing number of them are owned by Americans, who don’t have the same sense of history that the leagues have.

Of the 12 original members of Super League, four teams are owned by Americans  -- Arsenal (Los Angeles Rams owner Stan Kroenke); Manchester United (Tampa Bay Buccaneers owners the Glazer family ); Liverpool (Boston Red Sox owner John Henry); and AC Milan (U.S. hedge fund Elliott Management). Those owners are used to the “closed system” prevalent in American sports where teams stay in their respective leagues technically forever. European soccer traditions like relegation, where a team can lose their spot if they have a bad year, are totally foreign concepts. And the creation of the Super League seems like an attempt to rectify that situation. 

Relegation usually means fewer fans and less money for all but the most popular teams. And coming off a pandemic year, many teams just can’t afford to lose more money. 

In a statement, Manchester City, one of the founding members of Super League, said the league’s formation “comes at a time when the global pandemic has accelerated the instability in the existing European football economic model.” 

According to a report in the Financial Times, the teams in the Super League (minus Liverpool, which did not report 2019/20 season results) lost a collective €800 million ($962 million) last year because of the pandemic.

U.S. investment bank J.P. Morgan Chase has ponied up about $4 billion to help Super League clubs close that financial gap -- each team would receive between €200 million and €400 million, according to reports. And then there is the TV money.

TV rights for the top European soccer leagues are currently about $3.3 billion per year, but rights for the Super League could be even higher. Broadcasters and cable operators have already shown their increasing appetite for European soccer. And though the creation of a new league, with marquee-name teams, would only sweeten the pot, many have come out against the new entity.

Some reports have said Super League officials have already started talks with potential broadcast partners, with the Financial Times reporting that early discussions with Amazon, Facebook, Disney and Comcast’s Sky plc. Later, Reuters said Amazon and Facebook denied they were in talks. 

Others, especially those with ties to the traditional leagues, have come out against the upstarts.

According to Variety, BT -- which holds UK broadcast rights to the Premier League, UEFA club football and National League football -- said the Super League “could have a damaging effect to the long term health of football in this country.” 

DAZN, the sports streaming service that ponied up about $3 billion for Italian soccer rights earlier this year, has denied to Deadline.com reports in the Italian press that it was willing to pay about $3.5 billion for TV rights to the Super League if it comes to be. 

But let’s face it, if this league becomes a reality, somebody is going to pay for it. Sports continues to be the one of the last bastions of appointment TV, and if the recent rights auction for NFL games is any indication (BTW, prices doubled) networks and increasingly streamers are willing to pay up for them. Sure, there will be some initial outrage, but networks are in the business of aggregating eyeballs. And eyeballs, and increasingly U.S. eyeballs, watch soccer.

That is evident by the surge in U.S. soccer rights deals over the past few years. In 2015, NBCUniversal paid about $1 billion for U.S. rights to the English Premier League, a deal which expires next year. ViacomCBS has the rights to all UEFA Champions League games and last month spent an estimated $200 million over three years for U.S. rights to Italy’s Serie A games. Earlier this month it snagged English-language rights to Concacaf soccer. 

ViacomCBS has been ultra-aggressive in obtaining soccer rights, fulfilling a pledge at its Feb. 24 Investors Day that it would double down on soccer.

“As we look to the future, we are making soccer a core pillar of sports exclusively available on Paramount Plus,” CBS Entertainment chief George Cheeks said at the Investor Day.

Sports consultant Lee Berke, president of LHB Media & Entertainment, said most broadcasters and cable sports channels should show an interest in Super League rights if they become available.

“I think CBS would want to get involved, NBC, ESPN Plus,” Berke said. “Soccer is a valuable commodity for streaming services in the U.S. That being said, they [Super League] just signed a piece of paper.”

And that is the key. There is still a lot that has to happen before the so-called Super League begins to actually play. And potential rights purchasers have to consider the backlash that just the mention of the Super League has caused throughout Europe already. 

Since the league was unveiled, U.K. Prime Minister Boris Johnson has said the government would do everything in its power to block the creation of the new league, threatening to drop a “legislative bombshell,” according to some reports. 

French President Emmanuel Macron said the creation of the Super League “threatens the principle of solidarity of sporting merit,” according to Reuters. 

That opposition could be a factor in whether distributors line up for rights to the new league -- angering leaders of some of the most powerful countries in Europe may not help other endeavors these companies have in those areas not connected to soccer. 

“Everybody is being a little cagey,” Berke said. “You don’t want to get on the wrong side of everybody.”

Even if  the Super League becomes reality, most don’t think it will actually start playing games until 2024, so there is ample time for twists and turns to occur, Berke added. 

“Within the U.K. and Europe, this is dynamite,” he said. “I think everybody wants to see how this plays out first.”

So, it may be that some distributors that have relationships with the established leagues back off from the Super League initially, which would only open the door for other players to move in. Sports, like nature, abhors a vacuum. 

The New York technology company suing Quibi over its core user technology Turnstyle has received backing from activist investment firm Elliott Management Corp.

Eko is suing mogul Jeffrey Katzenberg’s new mobile-only streaming service, claiming it developed the feature that lets users toggle back in forth between portrait and landscape viewing modes. Eko is seeking an injunction.

Also read: Quibi Quibble Quickens, as Patent Dispute Gets Accelerated Hearing Date

Girthed at around $40 billion, Elliott Management most recently surfaced while accusing AT&T of mismanagement, demanding that the telecom sell DirecTV. The Wall Street Journal cited anonymous sources while reporting that Elliot is backing Eko with an undisclosed sum.

Visit Next TV to read more stories like this one. 

Quibi, a startup backed by $1.75 billion in investments, has dismissed Eko's claims as meritless. But Eko's backing isn't trivial, either--its $250 million in financial support includes a contribution from Walmart.

It was probably a given that AT&T would have to evaluate its options for DirecTV, in light of the lengthy letter one of its shareholders sent to the telco’s board of directors earlier this month, basically putting the 2015 purchase of the satellite giant on par with the introduction of New Coke, the smokeless cigarette and other equally terrible business decisions. But with the cat out of the bag -- the Wall Street Journal reported that AT&T is considering selling, spinning off or maintaining the status quo for the asset -- the consensus seems to be building that AT&T will have to do something. Just what still remains to be seen.

Hedge fund Elliott Management started this whole mess on Sept. 9, when it revealed that it had a $3.2 billion stake in AT&T (still well under 3% of outstanding shares) and fired off a letter to AT&T’s board criticizing chairman and CEO Randall Stephenson’s costly foray into the media business, particularly singling out DirecTV as an asset that should be disposed.

Elliott’s letter was typical of a lot of outsiders that buy into companies on a downturn -- it criticized management for embarking on the media buying spree -- AT&T has spent more than $150 billion in the past four years on the purchase of DirecTV and Time Warner Inc. -- lamented the stock price -- at between $36 and $37, Elliott says the stock is severely undervalued -- and criticized personnel moves.

Of particular ire was the decision to name WarnerMedia chief John Stankey as chief operating officer of AT&T. Elliott was perturbed that instead of conducting a thorough search for the most qualified executive available, it instead named Stankey -- who already was running a WarnerMedia, “itself a massive and very different business that clearly requires a full-time manager,” and who “would now also be responsible for an additional $145 billion of revenue as the president and COO of the entire company.”

Elliott mapped out a multi-point plan to restore AT&T to its former glory by switching its focus back to telecommunications, divesting the DirecTV business and other non-core assets, reducing inefficiencies and enhancing leadership and oversight. Follow those steps, Elliott said, and AT&T could be a $60 stock -- a 65% premium to its current price.

Related: AT&T Needs to Kill DirecTV to Save It 

At the Goldman Sachs Communacopia conference Tuesday, Stephenson hinted that AT&T would look into Elliott’s suggestions, adding that they were a “mixed bag.”

Let’s for a moment forget that improving inefficiencies and getting rid of under-performing assets isn’t exactly outside of the box thinking -- what business in its right mind wouldn’t want to do that? But don’t forget that a lot of people didn’t like the DirecTV deal back in 2015 -- it was a declining asset, the price was too high, and it wasn’t really clear what AT&T had in mind for the satellite business. 

Fast forward four years and those issues are even more pressing -- DirecTV has dropped about three million subscribers since 2015, the migration to its streaming service AT&T TV Now (formerly DirecTV Now) has peaked at about 1.6 million customers and is falling and its upcoming IPTV offerings -- AT&T TV and HBO Max -- are facing uncertainty and heightened competition from The Walt Disney Co. (Disney+), Apple (Apple TV Plus) and NBC Universal’s upcoming Peacock streaming service.

DirecTV caused a bit of a panic in Q2 when it lost nearly one million satellite TV and OTT subscribers, most of whom the company said were low margin customers rolling off deep discounts. The company has said it expects to lose another 300,000 to 350,000 pay TV subscribers in Q3, which added more fuel to the fire. 

But what a lot of people are forgetting is that maintaining the satellite status quo was never part of AT&T’s strategy with DirecTV in the first place. AT&T knew the satellite business was declining when they bought it -- they’d have to be blind not to see it -- but they didn’t care. What attracted them to DirecTV was its programming contracts -- which it could use as new distribution products were created -- and a customer base that could be migrated to those new products. The real value is in the people connected to AT&T’s offerings -- Stephenson estimated that number is about 170 million people across wireless, broadband and pay TV platforms -- and how they could monetize them through targeted advertising.

Veteran network systems executive and Connolly Network Insight chief Paul Connolly, who just issued his second report on AT&T -- AT&T Media Strategy Update 2019  -- said the ad business is at the center of AT&T’s media strategy.

With the national TV ad business at about $70 billion -- around the same as the industry generates from monthly pay TV subscription fees -- it’s a huge market and one that AT&T has been gearing up to address for awhile.

“I’m a firm believer that if they can pull off what the original plan was to do, which was to finally figure out how to do targeted advertising, they could change the economics pretty significantly,” Connolly said. “The question is how real is it? How close are they? And when can they get it rolling?”

To Connolly, AT&T’s moves over the past four years have all led to this point -- the launch later this year of AT&T TV, a thin-client IP-based offering that will offer new capabilities and will likely be priced aggressively, which should help attract and retain customers.

“I think they have a tool now to really stem the cord cutting,” Connolly said. “It allows them to basically control the home, show the AT&T screen, pull in DirecTV, pull in all the other OTT apps, has a Google Assistant voice remote and all of the Google Play Store apps. It’s like a service provider offering. It’s not an OTT offering, but it happens to run over IP streaming.”

To me, AT&T has always seen DirecTV as the means to a goal, not the end-all, be-all. Initially, the move was to migrate its wireline U-verse pay TV customers to DirecTV, and later to migrate more price-conscious satellite customers to the AT&T TV Now OTT service. The next step will be to migrate more pay TV customers to AT&T TV.

But that won’t happen overnight. And remember, AT&T didn’t get into the TV distribution business to get into price wars with Dish and Comcast. The goal is advanced advertising, but they only get there if they can keep most of those 170 million relationships. Losing or selling off 18 million DirecTV customers doesn’t help. In fact, it might collapse the whole model.

Granted, the ad model is pretty risky too. The industry has been waiting for targeted advertising to take hold for more than a decade, to no avail. But maybe, just maybe, technology and viewer habits have caught up to each other to make this the year -- or the year prior to the year -- for targeted ads to plant its flag in the advertising space.

“They could tilt the economics in favor of more advertising revenue versus subscription revenue,” Connolly said. “But if you don’t have the subscriber revenue, you don’t have the customers to do the targeting on.”

So that leads us to what will AT&T do? In a research report Thursday, Barclays media analyst Kannan Venkateshwar said the company has four options -- a sale, a split, a spin or a joint venture.

The possible sale of DirecTV brings up past memories of attempts to combine the country’s largest satellite TV service provider with it rival Dish Network, a pairing that some believe is more likely today than in the past, mainly because of the emergence of over-the-top competition and the steady decline of the satellite business.

But even Dish Network chairman Charlie Ergen, who would benefit from a DirecTV pairing, thinks it’s a long shot.

At the Goldman Sachs Communacopia conference Tuesday, Ergen said that although Dish “looks at everything” and a pairing would make strategic and economic sense, he doubted it would pass the regulatory test.

Regulatory issues could be a real problem. It’s what derailed any hope for a DirecTV/Dish merger in the past, and though there is a feeling that the current administration would look more favorably on a deal, Venkateshwar wrote that confidence might be misplaced.

He noted the difficulty that AT&T had in getting its merger with Time Warner Inc., approved -- the U.S. Dept. of Justice tried to block the deal twice in federal court -- President Trump’s ongoing Twitter battle with AT&T’s CNN news operations -- which he regularly calls “fake news” -- and just plain old antitrust law.

Combining DirecTV and Dish would have tremendous synergies -- and create a satellite company with about 30 million subscribers, tops in the pay TV universe -- but it would also remove the only viable competitor in most rural markets. And without a broadband product to bundle with video, combining the two would in some eyes merely hold off the inevitable.

Related: Can an AT&T-DirecTV Merger Fly? 

In his note, Venkateshwar wrote that a valuation of DirecTV compared to AT&T’s purchase price -- $48.5 billion in 2015 -- could only serve to reinforce Elliott Management’s criticism that AT&T paid too much. Worse yet, Venkateshwar said not only would a valuation prove Elliott’s point that the move into entertainment was a mistake, it “would be implicitly perceived as an acknowledgement of this by the company.”

Federal approval would be difficult even in today’s environment because Dish and DirecTV overlap in about 30% of their respective footprints. While in the past those issues are usually cleared up by forcing divestitures, that also is problematic because “there are no obvious buyers of this base,” Venkateshwar wrote.

The analysts also wasn’t a big fan of the split-of and spin-off options -- while they would help reduce leverage, AT&T already has a plan to get to under 2.5 times leverage in the next few years.

That leaves a joint venture, which the analyst sees as an attractive path especially if DirecTV and Dish share common back end cost.

“This could involve not just combining the transmission infrastructure but also functions such as customer support, engineering functions and billing systems,” he wrote, similar to what Charter and Comcast have done with their wireless businesses.

Venkateshwar stressed that creating a joint venture won’t be easy, but that despite the “execution challenges, we believe both management teams have enough incentives to consider this possibility.” He estimated that a JV could save between $500 million and $1 billion in combined costs and could result in AT&T’s margins rising by 50 to 100 basis points.

In the end, the Barclays analyst said that selling DirecTV to Dish for cash would be the best, but said there is a low likelihood of that happening because of regulatory concerns, or splitting off the assets, which presents other problems like does it make sense to own content (Time Warner) if AT&T doesn’t own distribution?

Venkateshwar said ultimately, the best move may be to throw in the towel on media all together.

“...[W]e believe the right sequence for AT&T, if it does indeed intend to go down this path, would be to consider a sale of Turner first and then split DirecTV off,” Venkateshwar wrote. “It may even make sense to combine these two assets and then split it off to shareholders.”

But I think AT&T has another, even more likely option -- keeping DirecTV and moving forward with the strategy they intended. It’s either that or admit that the past four years were just a bad dream.

With the full launch of its standalone streaming service HBO Max set for next year and an activist shareholder breathing down his neck, AT&T chairman and CEO Randall Stephenson tried to calm an industry audience Tuesday, adding that HBO Max would stand out among the growing list of streaming video competitors while recent criticism from investor Elliott Management is being addressed.

"This is going to be different,” Stephenson said of HBO Max at the Goldman Sachs Communacopia conference in New York Tuesday. “This is not Netflix. This is not Disney [Plus]. This is not Hulu. This is different, standing up a digital platform and driving fast penetration through customer relationships that you own in this distribution business.” Stephenson has said in the past that the service -- along with its sister streaming offering AT&T TV, which is scheduled to debut around the same time -- will leverage the 170 million customer relationships AT&T has through its various wireless and pay TV businesses.

Related: HBO Christens New SVOD Service HBO Max 

HBO Max, which will be unveiled at an investor meeting on Oct. 29 but will be launched in 2020, has come under fire because of what many analysts believe will be its pricing. Although AT&T hasn’t officially announced what the service will cost, most observers believe it will be between $15.99 and $17.99 per month, in the same ballpark as its standalone HBO Now streaming service. At that price point, HBO Max could be at a disadvantage coming out of the box, especially since its rivals Netflix ($12.99/month), Hulu ($8.99/month), Disney + ($6.99/month) and Apple TV Plus ($4.99/month) will be priced so much lower.

AT&T is not unaware of the controversy. Last week, AT&T chief financial officer John Stephens said that the HBO service itself is the main differentiator between HBO Max and its competition.

“Well, I think the first thing I want you to remember is that we also start with something called HBO,” Stephens said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Los Angeles. “And so we only have a 40-year head start with a quality product that is a premium.”

WarnerMedia has been beefing up the content on HBO Max, adding seasons of popular broadcast shows like “Friends,” British TV series “Doctor Who” and “The Big Bang Theory” for the service. 

Stephenson also addressed the criticism of Elliott Management, which wrote a letter to AT&T’s board of directors Sept. 9,  calling for the sale of DirecTV and criticizing the purchase of Time Warner and Stephenson’s voracious appetite for acquisitions.

Stephenson said the Elliott management letter was a “mixed bag,” with some suggestions that are being addressed and others that don’t appear to make much sense for the telco. But he was open to starting a dialog with Elliott, calling the firm “smart guys” who have good ideas that AT&T needs to “sit down and engage with them on.”

Stephenson admitted that the diversity path he has taken the telco down -- beginning with the purchase of DirecTV in 2015 and the Time Warner deal last year -- couldn’t have been imagined five years ago, what he called the “old world.”

“In the new world, it makes all the sense in the world,” he said. “Content is king, I’m an evangelical on that. “But distribution matters.”

The AT&T chief also addressed pay TV subscriber losses --Stephens said last week that AT&T could lose between 300,000 and 350,000 pay TV customers in Q3 as a result of carriage disputes with CBS and Nexstar Media Group earlier this year. There are still retransmission consent and carriage deals yet to be finalized -- 17 smaller TV stations that went dark on May 30 are still unavailable to AT&T pay TV customers, as is regional sports network Altitude Sports and Entertainment, which went dark on Aug. 31.

Disney began warning DirecTV customers that they could lose access to ESPN, ABC stations, Freeform and The Disney Channel in the absence of a deal last week, but apparently has given AT&T an extension to its deal as talks continue. 

Stephenson said AT&T has had to make some hard, but necessary choices regarding programming renewals.

“Those were a painful few weeks,” Stephenson said of the CBS and Nexstar blackouts. “... but it was the right thing to do."

AT&T’s recent promotion of WarnerMedia CEO John Stankey to chief operating officer of the parent company has set in motion speculation that he will assume the top spot at the telco once Stephenson retires. 

At the Goldman conference, Stephenson said he hasn’t been informed by the board of his retirement yet, but added that Stankey has done a good job, adding that he would be in a "good position" if he “executes this play.”

AT&T is bracing for yet another quarter of heavy customer losses at its pay TV operations, with chief financial officer John Stephens telling an industry audience Wednesday that the combination of rising prices and broadcast blackouts could result in as many as 300,000 to 350,000 subscriber losses for its DirecTV, AT&T TV Now and U-verse operations in Q3.

AT&T has weathered a steady stream of blackouts this year, starting with 120 Nexstar Media Group stations that went dark to AT&T customers on July 3. That deal was resolved last month after customers were without that programming for about six weeks, as was the blackout of CBS (three weeks). But there are still retransmission consent and carriage deals yet to be finalized -- 17 smaller TV stations that went dark on May 30 are still unavailable to AT&T pay TV customers, as is regional sports network Altitude Sports and Entertainment, which went dark on Aug. 31. Earlier this week Disney began warning DirecTV customers that they could lose access to ESPN, ABC stations, Freeform and The Disney Channel if a deal isn’t reached soon, which most observers take to mean by the end of this month. 

AT&T, like its other pay TV distribution peers, has taken a harder line stance against programming costs increases, and has been willing to risk losing customers in order to keep those expenses in line. But Stephens’ revelation comes at a curious time for AT&T -- it is set to launch two streaming video services in the fall -- HBO Max and AT&T TV -- and last week one of its biggest investors called for the company to jettison the TV business all together.

At the Bank of America Merrill Lynch Media Communications & Entertainment Conference in Los Angeles Wednesday, Stephens said AT&T has had to make “ tough decisions” concerning several retransmission deals that came up for renewal earlier this year, adding that it refused to make uneconomical deals, instead choosing to “hold our ground.”

Couple that with the earlier decision to raise pricing at its AT&T TV Now (formerly DirecTV Now) streaming service, and Stephens said that while the incremental impact of those decisions isn’t fully known, it could be as high as a loss of 300,000 to 350,000 pay TV customers.

DirecTV has already endured heavy losses as customers have defected to streaming pay TV services and other pay TV offerings from competitors. AT&T said it lost nearly 1 million subscribers across all its platforms in Q2 and since Q1 2017 the once No. 1 pay TV company in the country -- it lost that honor to Comcast in July  -- has shed more than 3 million customers.

Related: AT&T Needs to Kill DirecTV to Save It 

Adding fuel to the fire was a letter that AT&T investor Elliott Management sent to the phone company’s board of directors on Monday, criticizing it for purchasing DirecTV in the first place, and claiming that management has made a series of bad decisions taht have hurt the stock. Elliott, which says it owns about $3.2 billion in AT&T stock, called for the telco to get rid of non-accretive assets like DirecTV and focus on execution.

Stephens acknowledged receiving receipt of the letter, reiterating AT&T’s statement on the matter, adding that it’s already doing much of what Elliott is demanding.

“I feel strongly about the fact that management and the board feel strongly that our current strategies are the best way to create value for our shareholders and to maximize that value,” Stephenson said.

He also addressed the impending rollout of HBO Max and AT&T TV, brushing off criticism that the product won’t be competitive with new direct-to-consumer streaming video offerings from Apple TV and Disney, as well as SVOD pioneers like Netflix and Hulu.

“Well, I think the first thing I want you to remember is that we also start with something called HBO,” Stephens said. “And so we only have a 40-year head start with a quality product that is a premium.”