AT&T CFO Touts DirecTV, Says Company Will Grow Pay TV Subscribers in 2016

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DirecTV has seen strong subscriber momentum

While he doesn't comment on a carriage dispute with Univision, he says that contract negotiations with content companies overall "are going well."

AT&T continues to expect to grow its overall pay TV subscriber base this year driven by momentum at DirecTV, CFO John Stephens told the Deutsche Bank Media, Internet and Telecom Conference in San Francisco on Wednesday.

In a session, which was webcast, he said: "What we have seen is some real success in our satellite product. … In every month since the merger, we had more gross adds in the satellite business than in the prior year." Stephens added: "We feel very good about the ability to grow that business and keep that record in tact of more gross adds. Certainly, there is competition in the marketplace."

But satellite TV installs are hitting about 1,500 a day on average for the company, according to the telecom giant's CFO. “That’s a big ramp,” even from the end of the fourth quarter, he said. “That’s going really well.”

Overall, Stephens reiterated previous subscriber guidance, saying, "We are expecting video net adds this year."

In the fourth quarter, AT&T added 214,000 DirecTV subscribers, but lost 240,000 at its U-verse video service, with management predicting a return to overall subscriber growth soon. The telecom giant last year acquired DirecTV in a $67 billion deal and has predicted user growth at DirecTV would offset weaker trends at U-verse.

Stephens said Wednesday that the launch of integrated service bundles helps the company's competitive position as does its national reach.

He also touted the recently announced plan to launch three new subscription streaming services during the fourth quarter: DirecTV Now, DirecTV Mobile and DirecTV Preview. There are an estimated 20 million homes that don’t get basic pay TV subscriptions, and "that’s what this is aimed at," he explained.

Stephens didn't comment on a carriage dispute with Univision Communications, which has pulled its programming from U-verse, but told the conference that overall the company is satisfied with carriage deal talks. AT&T has said it will reach cost savings from bringing U-verse to the better rates DirecTV has been paying.

"Those contract negotiations are going well," said Stephens. "The key is not only are we getting the cost savings, but we are getting the mobile rights and the digital rights and the stacking rights.” All that “positions us well” to serve the company's customers, he said.