Monday, May 19, 2014

AT&T/DirecTV Deal: Recap and Implications

With Comcast looking to become the telecommunications super power with 30 million customers by acquiring Time Warner, AT&T has quickly responded with their $48.5 billion agreement to acquire DirecTV. I wrote last week that talks were happening and on Sunday, the pending deal was announced. This would make them the #2 company with 26 million customers. Both deals are still pending approval.

Skipping the rhetoric about consumer benefits (I still argue there are none), here are the highlights of the deal:

  • It gives AT&T a national presence
  • AT&T video subscribers will increase from 5 million to 26 million giving them more leverage when it comes to programmer deals.
  • It gives DirecTV customers a true broadband solution – although only in 25% of the country  

NFL Sunday Ticket Implications
One thing that can derail the agreement (other than needing government approval) is the NFL (Read the AdWeek article here). This is the last year of DirecTV’s current $1 billion deal for exclusive rights to carry the NFL Sunday Ticket. While they are confident they’ll be able to strike a new deal, AT&T included the ability to walk away if no deal is made. With the launch of the NFL Red Zone Channel a few years ago, I’m not sure the package holds the weight that it once did on the residential side. However, for bars and restaurants, it’s still huge. And I’m sure they want to keep cable watching from the sidelines. 
Dish Network
The biggest loser if this deal is approved may be Dish Network (Read the Variety article here). DirecTV and AT&T were their best options to be acquired. Assuming the deals are approved, the prospects don’t look good for Dish Network being able to compete with Comcast and AT&T as they stand now. They are securing programmer deals for an over the top service, but that’s more of a future play than a short term solution. Stay tuned to see what happens to them. 

Other Cleveland Providers
So with these potential super powers, it’s too early to say how other Cleveland providers may be impacted. We’ll be getting Charter and they’re being aggressive in their growth. Cox Cleveland is small, but has a long history. I would say that I think their days are numbered here, but there have been many other times that could have been said and they’re still here. Wide Open West is available in select areas. They may need to up their product offering to continue to be competitive. Although, their pricing guarantees keep them an attractive option. Amazon, Netflix and Hulu will continue to grow their usage as they continue with original programming.

Things are changing quickly, as I predicted they would once a Time Warner acquisition was announced. Hopefully this helps explain some of what is going on. If you have questions that I can answer for you or more information is needed, just send me a note. Let me know what your take is. What service(s) do you plan on using once everything is said and done?

Thanks for reading and, as always, please share my posts with your friends. 

No comments:

Post a Comment