ATLANTA--AT&T (NYSE: T) will be in a much better position to renegotiate content licensing deals with content owners once it closes its $49 billion acquisition of DirecTV (NASDAQ: DTV), according to AT&T executive Ralph de la Vega. AT&T's goal is make it much easier for consumers to get TV content on their smartphones and tablets without having to worry about whether or not they will be able to do so because of content rights, he said.
de la Vega (Source: AT&T)
The FCC and Department of Justice still need to approve the DirecTV deal, but AT&T expects that to happen in the second quarter. De la Vega, CEO of AT&T's Mobile & Business Solutions Group, said that setting aside the deal, AT&T is seeing a great consumer demand for video.
"What customers want is video on their terms on their device, on their schedule," he said in an interview with FierceCable at AT&T's foundry here. "And I think that's a huge challenge for industry to address because of the licensing." De la Vega noted that every time a piece of content is shown today, carriers need to get licensing for TVs, tablets and smartphones, and each device may have different digital rights.
Over time, de la Vega said, AT&T wants that to change. "We hope that with time, that as these contracts get reworked, that we can provide a really smooth transition," he said. "And with the DirecTV deal behind us I don't know anybody that will be in a better place to make that happen."
Currently, according to de la Vega, content licensing agreements make it "too cumbersome" for consumers to negotiate the digital content landscape. "I can understand why a content provider would want to make sure they have all of their bases covered," he said. "But I think it's hindering the adoption."
De la Vega gave an example that he was at home with his wife and they were both watching TV on their couch. His wife was watching a show on their TV and he wanted to watch a different show that was available on TV on his tablet. However, when he tried to do so, he was told that the content was not available on the tablet. "I wanted to watch it for 15 minutes, but couldn't do it because they didn't have the rights," he said.
"Over time we have to get the content providers comfortable that they will be able to protect their properties, get the expected revenue streams," he said.
"But I sense there is pent up demand for customers to do this in a much…simpler way" so that consumers don't need to guess whether a show is available on their tablet or not, he added.
The AT&T executive said that right now accessing content depends on which company provides Internet or TV service, what the content is and which device the consumer is using to access the content. "That says to me that we can make things a lot simpler for customers on something that they very much value," de la Vega said. "I think that is something that is solvable and with the DirecTV acquisition I think it will give us a chance to do even better in trying to solve that issue."
De la Vega's comments come amid a Thursday report from the Wall Street Journal, which describes the DirecTV purchase as a "melting ice cube" as over-the-top launches by companies like HBO and Apple turn up the heat on pure-video-play satellite TV services.
AT&T chief strategy officer John Stankey told the Journal that he thinks the erosion of pay-TV will be slower than a lot of people think.
"The world is going to be broadband--wireless and fixed--and that is where we want to be," Stankey said.
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