AT&T and DirecTV CEOs: Expect more original programming, no ‘a la carte’ surprises
FORTUNE — The CEOs of AT&T (T) and DirecTV (DTV) hailed their $49 billion deal as one that will “redefine the video entertainment industry.” But consumers likely are in store for more of the same trends that are shaping the television landscape today.
AT&T’s Randall Stephenson and DirecTV’s Mike White positioned the transaction, in which AT&T would acquire the satellite TV provider for $95 a share, as good for customers and pledged a series of pro-consumer initiatives, including deploying broadband service in rural areas and guaranteed pricing on stand-alone broadband.
But White (in a joint interview with Stephenson) told Fortune he doesn’t expect the deal will result in any “significant change” in the bundles consumers buy when they sign up for pay-television service. Consumer advocates are pushing for service providers to offer “a la carte” pricing that enables a household to buy only the channels it watches — ESPN, say, but not Lifetime (or vice versa). Existing packaging of big tiers of channels is “driven by the programming contracts, and I don’t anticipate any significant change in the bundling that goes on,” White said, noting that the combined company intends to be flexible in the service bundles of voice, video, broadband, and wireless it offers customers.
But White also noted that the transaction would likely accelerate the combined company’s ability to develop more original programming — adding to a crowded (and beloved) field of high-quality shows now churned out by networks, cable networks, and tech companies such as Netflix (NFLX) and Amazon (AMZN). DirecTV has a small roster of original scripted programs, and AT&T earlier this year announced plans to team up with Peter Chernin’s Chernin Group to acquire and invest in online video programming.
The CEOs’ proactive pro-consumer initiatives are an attempt to head off regulatory objections to the deal. Regulators scuttled AT&T’s effort to acquire rival T-Mobile’s U.S. operations a few years ago. “Mike’s team and my team have done an unbelievable job evaluating regulatory issues,” Stephenson said, noting that in addition to each side seeking opinions from economists and legal teams, he hired a separate law firm to provide an additional assessment.
Stephenson has said the AT&T acquisition of DirecTV isn’t a response to Comcast’s (CMCSA) pending purchase of Time Warner Cable (TWC). But in response to a question about Comcast’s growing size and the criticism lobbed at the Philadelphia-based giant as it has sought to expand, Stephenson told Fortune he has a plan for deflecting such disapproval: “There’s one thing that mitigates that and that’s giving your customers great service and great value.”