DirecTV, AT&T merger will 'redefine the video entertainment industry'

Calling DirecTV (NASDAQ: DTV) the best video provider in the business, AT&T (NYSE: T) CEO/Chairman Randall Stephenson made video delivery across all screens--television and mobile devices--a key point in an investor call discussing its $48.5 billion acquisition of the satellite pay-TV provider.

"This is a unique combination. No other company will have a nationwide mobile footprint, a nationwide video footprint, a broadband footprint as extensive as this one. … This will redefine the video entertainment industry," Stephenson said.

"We've had on and off conversations about the industry and whether it makes sense to put these two companies together," Stephenson told investors and analysts on the call Monday. "The whole idea, the vision of delivering video on all screens: The more we looked and evaluated, we knew we needed to be scaled in video."

"We think we landed on the best video player in the United States. They have the best brand, the best video customer base of anybody in this industry," he added.

DirecTV President and CEO Michael White echoed Stephenson's comments, citing the evolution of broadband technology, particularly wireless broadband, as a factor in the merger decision. "Clearly some things have evolved over the last year and this year … the ability to do the technology is one of those things," he said. DirecTV has been utilizing fixed wireless local loop technology to bring broadband services to its customers in Latin America, and it feels that WLL can be used to affordably bring faster broadband--and multiscreen video--to underserved rural areas of the United States as well.

AT&T's growing 4G LTE network would be an important factor in boosting broadband capabilities in those areas, he said.

Another piece of the pie is content, something Stephenson feels DirecTV has managed well over its satellite network. "The ability to deliver content to mobile devices involves separate arrangements. I have little doubt that to offer the services will require additional discussion with content folks," Stephenson said.

White added, "Mobile (in) the future has got a lot of video in it. You've got to have the rights, and at a competitive cost," he said, noting that those rights have to be negotiated for many different delivery platforms, both over-the-top and through AT&T's U-verse service and the DirecTV satellite service--which will continue to be a standalone offering for the next three years.

Both feel that the size and reach of a combined AT&T-DirecTV will result in content deals for both linear and online video that are in their favor. Ultimately, the combined companies hope to present a more integrated video platform for subscribers, with the same features available both in the home and on mobile devices outside the home.

"We expect with our collective scale we will find opportunities at a more competitive content cost than (we) would otherwise ever have gotten," White said.

"There's money to be made for both sides," Stephenson added. "I think a lot of new models will emerge as a result of this."

For more:
- listen to the webcast
- the Dallas Morning News has this post

Related articles:
AT&T to purchase DirecTV in $49B deal
AT&T-DirecTV combo promises new challenges for Comcast-TWC merger
AT&T's DirecTV deal to bolster rural broadband reach to 15M locations

Suggested Articles

Hulu with Live TV will raise the price of its base package by $10, bringing the cost up to $54.99 per month. The price change will kick in on Dec. 18.

As AT&T TV Now falls back in the pack, Sling TV and Hulu with Live TV have emerged as the co-leaders among virtual MVPDs in terms of subscribers.

Verizon's Stream TV device, for now, doesn't support Netflix.