DirecTV's Risky Streaming Launch: No CBS, No NFL Sunday Ticket

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AT&T Entertainment Group chief marketing officer Brad Bentley called DirecTV Now “a new model.”

AT&T's long-awaited DirecTV Now includes such channels as AMC and Disney along with future VOD channels from Reese Witherspoon's production company and Taylor Swift — but not Showtime.

Call them "chubby bundles." AT&T's long-awaited DirecTV Now streaming service, which launched Wednesday, offers packages ranging from 60-plus to more than 120 channels for $35 to $70 per month, in the hopes of giving viewers everything they want.

Everything but CBS and Showtime, that is. CBS Corp. is the only major entertainment company that hasn't inked a content deal with DirecTV Now, but talks between the parties are underway, AT&T Entertainment Group CEO John Stankey said when he unveiled details about the service on Nov. 28.

CBS, whose chief Leslie Moonves has called the company's output "must-have content," hasn't said why it has declined to be part of DirecTV Now, but it likely boils down to a disagreement over fees. Plus, CBS has its own service, CBS All Access, that is on its way to 8 million subscribers by 2020 and boasts exclusive original series such as the upcoming Star Trek: Discovery and The Good Wife spinoff The Good Fight. And Moonves is angling to bring NFL games to the service (Stankey said DirecTV also is talking to the NFL about eventually adding NFL Sunday Ticket to its offerings).

Observers say playing hardball is a gamble for both parties. "It's going to make a really interesting test case," says Northlake Capital Management's Steve Birenberg. "It seems risky for CBS, as it could succeed without them, and that would not only hurt CBS but weaken all content providers' negotiating position."

AT&T CEO Randall Stephenson's repeated promise of "100 premium channels" includes the most popular broadcast and cable networks from AMC, Discovery, Disney, Fox, NBCUniversal, Viacom and Time Warner. AT&T also announced future original VOD channels from Reese Witherspoon's new Hello Sunshine production company and Taylor Swift. But will DirecTV Now's biggest competition be itself? Grand View University communications professor Stephen Winzenburg thinks so: "DirecTV priced it attractively, but instead of drawing subscribers away from competitors, it may cause some of its current subscribers to downgrade."

This story first appeared in the Dec. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

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