AT&T CEO Says DirecTV Now Will Offer 100+ Channels For $35 A Month
AT&T CEO Randall Stephenson just unveiled a key piece of information about DirecTV Now, the streaming service he plans to introduce at the end of November: It will offer more than 100 channels at a cost of $35 a month “and that includes your mobile streaming cost,” he said today at the WSJDLive Conference.
“We think this is big,” he said in a joint appearance with Time Warner CEO Jeff Bewkes just days after AT&T agreed to pay $84.7 billion for the entertainment company.
The streamed package will include programming from Time Warner, Fox, and NBCUniversal, Stephenson says. “This isn’t the junk that nobody wants…It has all of the premium content you know and love and like to watch.”
The $35 price is much lower than analysts had anticipated based on the fees that the networks DirecTV Now likely will offer currently charge pay TV distributors.
Stephenson says, though, that the online service won’t require additional expenditures for a satellite dish, technicians or a set top box. “That’s a radical concept. That’s how costs go down dramatically.”
AT&T had been trying to develop this service for about three years, but could not “get the media companies to participate” until last year when it bought DirecTV.
DirecTV Now will target the 20 million households that he says have left the pay TV ecosystem over the last few years.
Stephenson also suggested that he has other plans to shake up the market. “We’re going to touch these third rails that the [pay TV] industry will not and has not touched.” For example, he asked: “How can you bring a la carte pricing into the ecosystem?”
Bewkes supported that view that the industry needs a jolt by recounting his frustration in persuading cable operators to introduce TV Everywhere and free VOD.
“They didn’t offer them to consumers, even though it was sitting there for no charge. Why not? …Basically they didn’t want to make the plant investments.”
Other programmers also shared the blame, he says. “They were waiting for years for this negotiation or that negotiation. That’s not how you change consumer behavior.”
As a result, consumers “had to go out and pay extra money to get library [subscription video on demand] services for the very same programming that should have been available on VOD all along.”
Stephenson pledged to keep his hands off CNN and news operations saying that “independence is sacrosanct.”
Stephenson adds that the Time Warner deal won’t increase pressure to raise prices — as some critics of the deal have warned — citing the $35 DirecTV Now price. He notes that this would be a vertical merger which is “rarely a means for raising prices.”
The AT&T chief also suggested that by owning Time Warner the company can provide a check on rising programming costs — which he says, as a general proposition, “are not going down.”
Bewkes built on the companies’ theme that AT&T’s consumer data and ability to offer premium-priced addressable ads into programming mean that more of the costs to provide service will go “to advertising as opposed to people.”
A lot of investors fear that the deal will be blocked by federal regulators, who already stopped AT&T from buying T-Mobile. But Stephenson says he sees no problem.
“We knew going in that [T-Mobile] had a lot of risk around it,” he says. “You were taking a nationwide competitor out of the market place. You can’t compare the two [deals].” With Time Warner “the media market isn’t changing, and the telecom market isn’t changing.”
If approved, Time Warner will operate as “a wholly owned separate subsidiary of AT&T,” Stephenson says adding that he doesn’t “know the first thing” about running premium TV networks and movie production.
The entertainment company “will continue to distribute their content widely and broadly” and AT&T will continue to offer a broad array of channels.
Yesterday Netflix CEO Reed Hastings told the gathering that he would not oppose the deal unless it gives an “unfair advantage” to Time Warner properties led by HBO.
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