Q. I don’t understand what AT&T is doing with DIRECTV or U-verse, either. They raise prices. They stop selling it in some places. It makes no sense to me. It doesn’t seem like they really want to be in the TV business even though they paid all that money for DIRECTV. What’s the deal with them and TV? Do they want out of the TV business? — Cliff, Dallas.
Cliff, the answer is yes and no. AT&T wants to be in the TV business, but also doesn’t. Let me explain.
AT&T paid $49 billion to purchase DIRECTV in 2015. But since then, DIRECTV has lost roughly five million subscribers, and it’s clear that AT&T doesn’t believe satellite TV, or the traditional TV business as a whole, has a future. That’s also why AT&T has stopped taking new customer orders for U-verse, its other traditional pay TV business.
While AT&T claims publicly it still values DIRECTV, that doesn’t pass the smell test because the company has decided to stop marketing the satcaster outside of select rural and suburban markets. Despite the massive investment in 2015, the company believes that DIRECTV is powerless to thwart the growing interest in cord-cutting and streaming.
Rumors are flying that AT&T is looking to sell DIRECTV and it wouldn’t surprise me if a deal is consummated by year’s end, most likely with Dish.
AT&T will never admit it, but I strongly believe the company rues the day it decided to buy DIRECTV.
But that doesn’t mean it wants out of the TV business.
In fact, AT&T wants to be a leader in the ‘new tv’ business, which consists of on-demand programming available via streaming on multiple devices, from your television to your smart phone to your tablet. That’s the motivation behind AT&T’s major investment in HBO Max, the new online version of HBO.
The company believes that today’s consumers are no longer wed to watching television at specific times with the occasional exception of live sports. In AT&T’s view, it makes more sense to supply a massive library of programming that allows the viewer to decide what to watch and when.
The traditional TV business is broken, says AT&T.
(It’s also no coincidence that many ‘new TV’ companies prefer the on-demand, streaming approach because it’s significantly less expensive than the traditional TV distribution method, such as satellite or cable infrastructure. If streaming was more expensive, you can bet that companies such as AT&T would still be investing heavily in cable and satellite.)
AT&T is transitioning from traditional TV to the ‘new TV’ as fast as humanely possible. That’s why I predict that in the next 12 months, it will:
* Sell DIRECTV
* Close U-verse
* Close AT&T TV Now, which provides the traditional live channel lineup online.
* Close AT&T TV, its new live channel streaming service that is designed to be a DIRECTV alternative.
AT&T will jettison all traditional TV products and concentrate solely on on-demand and streaming.
Of course, AT&T will continue to license live channels such as HBO, TNT and TBS to existing cable and satellite services. But it will no longer be the company that offers a live channel lineup to consumers for a monthly fee.
Cliff, hope that makes sense. Happy viewing, and stay safe!
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Note: Pictured above is Friday Night Lights, one of the shows now available on Peacock.
— Phillip Swann