AT&T to Launch Mobile Entertainment Service, CEO Says

AT&T chairman and CEO Randall Stephenson
AP Images

Randall Stephenson also discusses hopes to create more original content for DirecTV or mobile, including via a partnership with Peter Chernin, at the UBS media and communications conference in New York.

Telecom giant AT&T is planning a mobile entertainment service, chairman and CEO Randall Stephenson told an investor conference on Tuesday.

Speaking at the 43rd Annual UBS Global Media and Communications Conference in New York, the exec discussed his company's hopes to launch an offer along the lines of competitor Verizon's Go90. Stephenson said AT&T is aggressively pursuing rights to offer an OTT bundle of content for people without a satellite TV subscription for a mobile or single home screen, citing 30 million homes without pay TV subscriptions in the U.S. He said the company was "very interested" in such an offer for cost-conscious consumers and would address the topic further soon. It wasn't immediately clear if that offer would be immediately available.

Stephenson also said that AT&T would soon announce and in January launch a "premium content" package that will offer "mobile stacked content together with a really robust wireless asset."

He didn't provide many details of the offer that some analysts have expected since the acquisition of DirecTV. But touting that merger, the AT&T boss said that when people buy DirecTV, “they are buying a big bundle of content.” Stephenson added, "That big bundle content we will deliver and are delivering in one of two ways: We are streaming that bundle of content into their home ... [and] we are also streaming the content to a mobile device."

In the past, the company didn't have all those content rights, he said. "You go down the premium content channels, we got the stacking rights and mobile rights," Stephenson said, mentioning Showtime, HBO, Starz, Viacom's networks and A&E. "This is a big deal ... this is about the best over-the-top portfolio of content, I believe, in the United States." (Stacking rights are the rights to offer full current seasons of TV shows, including latest episodes, in addition to past seasons.)

Plus, given the company has live sports via the likes of ESPN and NFL Sunday Ticket and movie libraries, Stephenson touted AT&T's position. "We will get to put some details on this, announce it and launch it in January, the idea that you put that portfolio of mobile stacked content together with a really robust wireless asset," said Stephenson. "It will turn some heads."

The AT&T topper also discussed a push into original content. Differentiating content is key these days, and Netflix is the master at it, so his company is looking to develop more "proprietary content," said Stephenson. He said it could do so for DirecTV or mobile and could do it through Otter Media, the online video joint venture with Peter Chernin that has acquired a majority stake in YouTube multichannel network operator Fullscreen.

Discussing the AT&T deal, Stephenson said: "All in, the integration is going quite well." Addressing content synergies, he said "we have done a number of content deals" since the DirecTV acquisition, and all are progressing on the path the company envisioned.

AT&T immediately added DirecTV to its stores, helping the latter go from declining subscribers to growing almost overnight. "You will see DirecTV momentum continue into the fourth quarter," said Stephenson, but added that there is some migration from AT&T's U-verse video service to DirecTV, putting "a little pressure" on the overall video sub number.

"I think we still have a shot at growth in the fourth quarter," the CEO said. "But for sure, as we move into the first quarter, we will have TV subscriptions growing."

With its $49 billion acquisition of satellite TV giant DirecTV this summer, AT&T now is the largest pay-TV provider in the world, providing service to more than 26 million subscribers in the U.S. and more than 19 million in Latin America.

The company has said it expects $2.5 billion or more in annual cost synergies from the DirecTV transaction by 2018. It has also highlighted the opportunity for programming cost savings. AT&T's U-verse video service pays $17 per subscriber per month more in content costs than DirecTV, according to management, providing an opportunity to negotiate with "the content guys."  Executives have said content companies could in return benefit from more data on who is watching and more targeted advertising opportunities.

The figure for the cost savings "does not include numerous revenue synergy opportunities, including cross-selling additional products to each customer base; enhanced retail distribution as AT&T begins to offer DirecTV in its 2,200 company-owned retail store locations; and enhanced advertising opportunities, such as local ad insertion," the company has said. The cross-selling is a 39 million total-household opportunity, with 15 million homes possibly adding wireless, 21 million adding video and 3 million adding high-speed Internet services, it said.

 

 

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