Q, I keep reading that AT&T thinks DIRECTV and satellite TV doesn’t have much of a future. Do you think that’s right? Will there even be satellite dishes in a year or two? We have had DIRECTV for several years and would hate to do without it. — Ginny, Lorton, Virginia.
Ginny, AT&T is not bullish on the future of satellite TV. Although it owns DIRECTV, AT&T has decided to place its bets on streaming with the recent introduction of HBO Max and AT&T TV. That’s why multiple news reports say AT&T is exploring selling DIRECTV in the coming months, if not weeks.
But I believe that satellite TV will be around for at least several more years, although it won’t be as dominant in the marketplace as it was from the late 1990s to the first half of the 2010s. Streaming can be done cheaper so it’s here to stay, and it will dominate later this decade and beyond.
Here are the three reasons I think that satellite TV can continue to exist in an increasingly crowded and complex pay TV industry.
1. Rural Residents
Many rural residents have little or no access to high-speed Internet. Consequently, streaming is not an option for them, and in many areas, neither is cable TV. If they want to watch television, satellite TV is the only game in town.
The FCC this year estimated that 21 million rural Americans still lack access to high-speed Internet, although some believe the number is higher. If DIRECTV and Dish were to generate subscribers from this audience alone, they could stay in business for quite awhile.
2. Consumers Want a Cable TV Alternative
But the rural market is not the only lucrative market available to satellite TV providers. Many suburban residents who have access to high-speed Internet are not satisfied with live streaming services (YouTube TV, Sling TV, etc.) which often lack certain channels and technology features such as 4K TV. They prefer a premium TV service from cable or satellite; it may be more expensive, but they are willing to pay for the added convenience and entertainment. Satellite TV distributors can still generate a significant number of subscribers from this market.
3. The DIRECTV-Dish Merger Is Inevitable
As Dish Chairman Charlie Ergen often says, a merger between DIRECTV and Dish is inevitable. And when it happens, the company left standing (likely Dish) will have more subscribers and less competition. This will enable it to streamline resources, save money, and put greater pressure on programmers to reduce their carriage demands. For instance, if DIRECTV and Dish merged today, the new company would have nearly 25 million paying subscribers. Programmers would think twice before allowing their channels to be blacked out on a service with so many viewers.
This is why I think if Dish merged with DIRECTV, you would see fewer carriage disputes than you now see on Dish. Ergen and his team would have more leverage in negotiations and therefore would feel less need to use blackouts as a negotiating ploy.
Bottom line: AT&T seemingly wants to free itself from the satellite TV business. But it’s largely because the company wants to go in a different direction, not necessarily because it thinks the dish is dead, at least not in the near future. Under the right conditions, satellite TV can continue, and will likely continue, doing business for several more years.
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— Phillip Swann