Telecom giant AT&T remains confident about getting approval for its planned $85.4 billion Time Warner acquisition, CFO John Stephens signaled Wednesday.
Speaking at the Cowen and Company Technology, Media and Telecom Conference in New York, in an appearance that was webcast, he also provided further insight into AT&T’s plans for additional streaming video services that it is hoping to launch, including one offering a “skinny” bundle of networks for $15 per month.
The company’s DirecTV Now over-the-top, or streaming, service has been “very effective” and is positioned for long-term success and growth after reaching more than 1.5 million subscribers, Stephens said. He also argued that the company’s traditional high-end pay TV service from DirecTV and U-Verse “still has a place in the marketplace” as well.
But AT&T is planning to add two more services to its mix to cover more customer segments. The first, which the company is hoping to launch by the end of the year, is a so-called thin-client in-home streaming device that will offer “the full scope of services” similar to DirecTV Now, but at a cheaper price given the low subscriber acquisition cost and lack of the need for truck rolls given that the company only needs to send customers the device, he said. The CFO emphasized that it will be connectable to any broadband service. Management previously signaled that this service could also integrate access to other streaming services, including Netflix, Amazon, Hulu and YouTube. Stephens didn’t mention a price point for the service.
The other planned streaming service will offer a skinny programming bundle and “will be based on getting the Time Warner deal done,” according to Stephens. He reiterated previous comments that the offer, dubbed AT&T Watch, will cost “in the $15 range” per month, compared with DirecTV Now, which starts at $35. He described it as a “very low-end, very thin collection of content.” Providing some detail on how the service could look, Stephens said it would, for example, take some of Time Warner’s Turner cable networks and “bundle that with a small number of other channels.”
After the recent trial about the planned Time Warner takeover, a judge will by June 12 unveil his decision that will determine the fate of the acquisition after litigation brought by the Department of Justice, which has argued it would harm competition.
“We continue to believe that this vertical merger will be very good for consumers,” Stephens told the investor conference Wednesday. “[We] look forward to the judge’s ruling and moving forward and getting the transaction completed and commencing with the integration.”
AT&T previously updated its forecast for the Time Warner deal’s cost savings, saying that after three years, it is targeting $1.5 billion, up from $1 billion. It is also expecting “significant” revenue opportunities.
Asked Wednesday how Time Warner has done since the deal was unveiled, Stephens said: “They are performing very well compared to what our expectations were,” including growing profits further. “The management team has done a great job,” he added. “[We] continue to believe in the basis and the premise for the merger.”
