Deeper Dive—Dark clouds descend on DirecTV

DirecTV has had a rough week or so. (Acabashi/Wikimedia Commons)

For a long time now, quarterly earnings season has practically been guaranteed to be a bad time for the DirecTV brand. But this round of results has been particularly brutal for AT&T’s satellite operator.

First there was AT&T’s second-quarter earnings that arrived with a crushing net loss of 946,000 video subscribers between DirecTV, DirecTV Now and U-verse. Although Charter and Comcast last week each chipped in substantial video losses, it was AT&T’s 778,000 traditional video subscriber losses that did most of the heavy lifting in a nightmare week for linear TV, and led industry analyst Michael Nathanson to project a “freaking ugly” cord cutting rate of 5.5% during the second quarter.

Then came news that the U.S. Department of Justice had signed off on T-Mobile’s $26.5 billion merger with Sprint on the condition that Dish Network be set as a fourth national facilities-based wireless provider. Of course, this deal presents challenges for AT&T’s wireless business but it also likely squashes any chance that Dish Network and DirecTV will be able to merge their struggling satellite TV businesses.

If DirecTV was feeling dejected by Dish Network’s sudden wireless popularity, at least it could look forward to early the following week when it could once again commiserate with Dish Network over satellite subscriber losses. After all, Dish had lost nearly 650,000 satellite subscribers over the previous two quarters. But then Dish went ahead and lost only 79,000, about half the subscribers it lost in the year-ago quarter.

Then the latest blow to DirecTV came from inside its own house, when parent company AT&T upended its streaming TV service nomenclature by slapping a fresh AT&T TV Now name right where DirecTV Now used to be. The new name more clearly aligns AT&T’s virtual MVPD with its upcoming new streaming TV service, AT&T TV, and at least softens some of the confusion that might arise from both services functioning out of the same app. It seemed to make sense. Still, shots were fired.

So, DirecTV, you had a bad week or so. At least people are still talking about you, unlike AT&T WatchTV. And AT&T CEO Randall Stephenson said that the traditional DirecTV product will still be around for a long time.

But with more subscriber losses to come as promotional price locks expire and the imminent arrival of AT&T TV – which will likely offer a superior service for less than the cost of DirecTV – the future of AT&T’s satellite service looks dreary.

Suggested Articles

NEXTGEN TV – a new enhanced standard for broadcast television – finally went live this week in Las Vegas after years of development.

Cord cutting will get worse for cable companies. But the financial impact for those same companies will be limited.

Akamai and Conviva today said that they formed a strategic partnership and will work together to improve streaming video quality for end users.