Category Archives: DirecTV

AT&T Expansion and DirecTV Merger

AT&T and Direct TV Logos

In 2014 AT&T and DirecTV announced a merger worth almost $50 billion dollars. While this proposed deal would provide a new way for AT&T to expand its footprint, the process had been stuck in the approval phase for months, although after FCC Chairman Tom Wheeler recommended last week that the deal move ahead, industry experts now believe that it will be approved formally within ten days. It appears that the main sticking point had been ensuring that AT&T adheres to the new FCC rules pertaining to broadband speeds. While this impasse persisted, AT&T was forced to file for two extensions to close the deal, the most recent only a few weeks ago.

When the deal does receive final approval, it will make AT&T the largest TV provider in the nation and will give DirecTV customers access to broadband services. Two recent filings to the FCC detail parts of AT&T’s plan to address the Department of Justice’s concerns that the merger may create a TV and broadband monopoly. The first filling stipulates that lower and middle income families will have access to DSL services, if available, at discounted prices. Upon further review of the filling, however, there are major limitations on this provision. In particular, the program will continue for only four years and for the more remote locations, will only provide speeds of 1.5 Mbps, which is too slow to support streaming services like Hulu Plus or Netflix. This low speed option has caused experts to speculate this is a different tactic in video slowdown and wonder if AT&T will be in full compliance with the Net Neutrality ruling if they do not improve this aspect of their proposal. Prices for this service would range from $5 to $10 per month, while a higher tier with speeds up to 5 Mbps would cost $10 to $20 per month.

The second filing to the FCC also addresses coverage issues, but deals with fiber internet customers. As part of its proposed merger, AT&T has promised that it will extend its 1 Gbps fiber footprint to almost 12 million businesses and homes within the next four years. This announcement comes on the heels of one made in April 2015 that AT&T was looking at nearly 100 cities where they might roll out fiber service, including Chicago, San Francisco, and Atlanta. As mentioned in the new FCC filing, AT&T has now added a new focus on the state of Florida, in particular the cities of Miami and Fort Lauderdale. The company will draw on its recent successful expansion in the state of Texas, particularly around Dallas and Austin, to implement an efficiency plan to bring its GigaPower fiber service to the Sunshine State by the middle of 2016. Whether or not these efforts are enough to alleviate any lingering concerns still held by the Department of Justice should become clear by the middle of August 2015.

 

Confirmed and Potential Changes to Sports Bundles and Television Providers

Logos for MLB, the NBA, the NFL, and the NHL.

Continuing the trend of breaking apart cable packages, the NBA announced after the 2015 NBA Finals that beginning next season they will be making changes to their League Pass. In existence since 1994, the League Pass for the 2014-2015 season cost $200 and provided subscribers access to over 1,000 games that were not already available on a local sports network in the region. This plan was offered through TV providers and directly from the NBA via their own online video platform designed for iOS, Android, and desktop computers.

 

The changes in the NBA League Pass bundling will allow subscribers to purchase season-long access for a single team or purchase access to individual games. Although the official pricing tiers will not be released until July 2015, industry experts expect that following a single team for the season will range in cost from $50 to $100, while individual game prices will be in the $2 to $5 range. The latest speculation is that the prices for these tiers will be consistent across markets and teams, regardless of their size or popularity. However, the one restriction will be that this unbundled package will only be offered through the NBA’s video platform, rather than through the television providers. In light of this announcement, there have been discussions to resolve some areas of concern between the NBA and their broadcast partners, including ESPN, Turner Networks, and regional sports networks, such as the Los Angeles Lakers’ SportsNet.

 

While analysts praise the NBA for making this decision, and stress the new growth this move is bound to bring to Commissioner Adam Silver’s league, the NBA is bucking the trend of the other professional sports leagues in how they offer their products. MLB and the NHL also have sports packages, while the most famous, and controversial one, is the NFL’s Sunday Ticket Package, which has also been in existence since 1994. Offered exclusively through DirecTV, a lawsuit was filed recently claiming that the NFL’s package structure and use of blackouts are in violation of federal law and need to be overturned. While this lawsuit is just beginning, a recent development in a case involving NHL blackouts and bundled packages may ultimately impact the case against the NFL. The settlement in the NHL case means that for the next five years fans will be able to purchase a package online, known as Game Center Live, that allows them to follow a single team at prices more than 20% below the current cost of bundled packages. Legal experts expect the lawsuit against MLB to be resolved in the same way. All of this suggests that while television providers may be unhappy with the NBA’s voluntary decision to provide a non-bundled package, it may spare the NBA costly legal battles in the future.