DirecTV Executive Promises Return to Growth "Soon"

John Stankey - H 2016
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In the fourth quarter, AT&T added 214,000 DirecTV subscribers but lost 240,000 at U-verse.

John Stankey, the CEO of AT&T Entertainment Group, lamented Wednesday how difficult it has been to integrate the giant phone company with DirecTV, the satellite TV service it purchased for $67 billion last summer, but he promised growth in video subscribers would resume "soon."

"There's a lot of dynamics going on putting two large businesses together," Stankey said at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. "There's thousands of employees that have to be taught about new products, and people have to learn how to use new information systems to be able to sell and support products. You have to educate and change compensation plans so people know what they're getting paid when they sell a product."

In the fourth quarter, AT&T added 214,000 DirecTV subscribers but lost 240,000 at U-verse, for a net loss, ending the quarter with 25.4 million video subscribers.

Part of the strategy to return to growth includes the rollout of new products, so much of the discussion at the conference Wednesday was about Tuesday's announcement that DirecTV will offer three different over-the-top services.

DirecTV Now will look like regular DirecTV except streamed online, targeting the 20 million U.S. households that do not pay for TV today. Stankey expressed confidence that DirecTV Now will be more popular than Sling TV and others offering skinny bundles of just a few dozen channels. He noted that even in a household of just two, the odds are a husband and wife won't each get their favorite networks in such limited bundles.

"Skinny bundles have very small application over time," he said.

The other two plans will be called DirecTV Mobile, tailored to people who like to view their TV on their smartphones, and DirecTV Preview, which focuses on Millennials and will include video from Otter Media, AT&T's joint venture with the Chernin Group.

"By evidence of what we announced yesterday, what we've done with the organization, we're very focused on facing off to the consumer in the way the consumer wants us to face off, which is one company selling a great list and bundle of services to them in very clean distribution," said Stankey.

"We have a lot of platform work to do," he said. "We didn't buy DirecTV because we love satellite exclusively as a distribution medium, we bought it because it gave us scale in entertainment ... but we clearly understand that new platforms need to be in place."