AT&T Drops ‘Watch TV’ Sign-Ups

AT&T has begun informing users that it will no longer offer its low-budget AT&T Watch TV service to new and returning subscribers.

“Standalone WatchTV is no longer available for new sign ups or to re-subscribe,” AT&T said in a statement. “Existing WatchTV customers who subscribe to the app or have a qualifying AT&T Unlimited plan can continue to use the service. Customers on a qualifying AT&T Unlimited plan with the WatchTV benefit can create a separate account.”

Launched in 2018 during AT&T’s contentious regulatory battle with the DOJ over its $85 billion acquisition of Time Warner, and targeting the younger high school and college-age demo using mobile devices, AT&T Watch TV is a $15 a month streaming service featuring select channels and no DVR.

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With the rebranding of DirecTV Now to $39.99 AT&T TV in March, the telecom-turned-media-giant is streamlining its streaming portfolio. AT&T TV also includes access to new subscription streaming video service, and company flagship, HBO Max.

Indeed, the telecom continues to struggle pitching standalone online TV (and linear pay-TV) to consumers. AT&T jettisoned 897,000 combined DirecTV and U-verse subs in the first quarter (ended March 31), in addition to 138,000 AT&T TV members. The one million+ sub loss was up 65.1% from the 627,000 subs lost in the previous-year period.

AT&T TV Launch Set for Feb. 27

AT&T’s rebooted online TV platform, AT&T TV, is reportedly set to launch on Feb. 27. The service is a rebranding of DirecTV Now, the online TV service that launched to much fanfare at $34.95 monthly before hemorrhaging subscribers following a price hike.

The new service will be priced at $59.99 and requires a two-year contract. The service features 4K functionality and includes 500 hours of DVR space.

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Whether AT&T TV will succeed where DirecTV Now failed remains to be seen. DirecTV Now lost nearly 20% of its subscribers in the six months after it raised prices. DirecTV Now subs dropped from 1.8 million to 1.3 million in the past year.

AT&T posted an overall 946,000-subscriber loss, which included DirecTV satellite and U-verse wireline TV services. Things got worse in 2019 with the telecom announcing it lost more than 3.4 million linear TV subs, including 945,000 subs in the fourth quarter, ended Dec . 31.

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AT&T TV Streaming Service Launching in February 2020

AT&T’s complicated path to online television distribution is getting a little clearer. The telecom giant plans to roll out a branded service called AT&T TV next February, according to Jeffery McElfresh, CEO of AT&T Communications.

Speaking Dec. 12 at Barclays Global Technology, Media and Telecommunications Conference in San Francisco, McElfresh said 2019 was the high point for pay-TV subscriber losses, which included DirecTV, AT&T U-verse, AT&T Watch and AT&T TV Now (formerly DirecTV Now).

AT&T Communications CEO Jeffrey McElfresh

The telecom’s pay-TV and OTT sub losses in 2019 have been staggering. AT&T lost 1.4 million AT&T TV subs in Q3, not including 195,000 OTT. The company lost 950,000 pay-TV subs in Q2, excluding 168,000 DirecTV Now subs. It lost another 544,000 subs in Q1, on top of 85,000 OTT.

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Indeed, the DirecTV Now losses, which have been troubling in light of the marketing and company push toward OTT distribution around a known satellite brand, prompted a branding change to AT&T TV Now.

“As you think about the subscriber volumes of our legacy business, we will improve the performance of that,” McElfresh said without elaborating. “But our growth agenda is on 5G [which just bowed in 10 cities], our entertainment group and on AT&T TV that will be offered nationwide.”

He said the lower capital expenditures involved in OTT distribution and technological improvements would help AT&T TV reach the finish line.

The odds are not in the telecom’s favor. Since launching in 2015 with Sling TV and Sony PlayStation Vued, the online TV business has been considered an antidote to SVOD and savior for legacy pay-TV. But consumer interest has stagnated.

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Sling remains the market leader with about 2.6 million subs. But DirecTV Now, which reached 1.5 million subs through loss-leader pricing, saw subs drop the service following a price hike. And shuttering PlayStation Vue never gained much traction beyond 500,000 subs.

“We’ll grow … in our pay-TV business with AT&T TV, coupled with a focus on our fiber broadband footprint driving incremental penetration,” McElfresh said. “And that’s how we balance out our entertainment group’s performance in 2020 and beyond.”

CFO: AT&T TV Sub Loss Peaked in Q3

When AT&T launched DirecTV Now in 2015, the telecom had big hopes the standalone online TV service would help migrate pay-TV subs to over-the-top distribution.

The media company envisioned gradually weaning consumers from the cable guy (U-verse) and satellite (DirecTV) to streaming video and competing against Sling TV, (shuttering) PlayStation Vue, YouTube TV and Hulu with Live TV, among others.

Initial consumer response to the loss-leading $34.99 monthly service was strong, quickly generating 1.8 million subscribers. Then came a $5 price hike, and DirecTV Now began hemorrhaging subs — losing 83,000 subs in Q1 after shedding 267,000 subs in Q4 2018. It lost another 168,000 DirecTV Now subs in Q2.

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AT&T had seen enough, changing the DirecTV Now brand name to AT&T TV.

Speaking Dec. 3 at the Wells Fargo Technology, Media & Telecom Conference in Las Vegas, CFO John Stephens said the worst is behind sub losses for AT&T TV. Indeed, the telecom lost a whopping 1.4 million AT&T TV subs in Q3.

“The transition we are going through is new stuff,” Stephens said. “But we are optimistic we’ve hit the peak sub losses in the third quarter.”

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Stephens said going forward sub losses should be offset by growing broadband subscribers and pending SVOD service HBO Max, which launches early next year, and will be targeted towards AT&T’s 170 million consumers, including mobile and broadband. That tally increases to 200 million when factoring in CNN and sports-themed Bleacher Report.

“We have a base that’s dramatic,” he said.

Stephens contends AT&T’s rollout of 5G wireless and high-speed fiber networks will return AT&T TV to positive growth.

“Access to stream AT&T TV is going to be more efficient,” he said.

Pay-TV Shocker: AT&T Loses More Than 1.3 Million Q3 Subs, Including 195,000 OTT

HBO Max can’t come soon enough for AT&T.

The telecom giant Oct. 28 said it lost 1.16 million pay-TV subscribers in the third quarter (ended Sept. 30). It lost an additional 195,000 AT&T TV Now (formerly DirecTV Now) subs.

The losses compared with 346,000 pay-TV subs jettisoned and 49,000 DirecTV Now subs added in the previous-year period.

The company attributed the losses to customers rolling off promotional discounts, programmer disputes and competition, as well as lower gross adds due to the continued focus on adding higher-value subscribers.

In the past 12 months AT&T has lost more than 3.2 million pay-TV subs as subscribers migrate toward alternative video services, including over-the-top. It ended the period with 20.4 million combined DirecTV and U-verse subs compared to 23.3 million a year ago.

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AT&T TV Now has lost 713,000 subs since launching Nov. 30, 2016, as a $34.99 monthly standalone online TV service. It ended the period with 1.14 million subs compared to 1.85 million last year.

Unlike other pay-TV distributors, AT&T is not supplanting linear TV subs with high-speed Internet. The company lost 83,000 broadband subs compared to a net addition of 31,000 subs last year. It lost 36,000 DSL subs, an improvement from a loss of 45,000 subs in the previous-year period.

AT&T did add 318,000 high-speed fiber subscribers.

AT&T ended the period with 14.3 million broadband subs, down from 14.4 million a year ago.

“The strategic investments we’ve made over the last several years have given us the essential elements to meet growing demand for content and connectivity,” Randall Stephenson, AT&T chairman and CEO, said in a statement.

Stephenson remain upbeat on the company’s future saying the three-year plan delivers both “substantial and consistent” financial improvements over the next three years.

“We grow revenues, [pre-tax earnings] every single year, and free cash flow is stable next year, but then grows in both of the next two years, as well,” he said. “And all of this is inclusive of our investment in HBO Max.”

HBO Max Expands Executive Team

AT&T’s pending subscription streaming service HBO Max Oct. 2 added several executives to its ranks.

The service, which is set to launch in Spring 2020, named Billy Wee SVP of original animation, and Nikki Reed VP of kids and family scripted originals.

Billy Wee

Wee comes from WarnerMedia’s TBS, where he was VP of original programming, and Reed hails from Viacom’s Nickelodeon, where she was VP of original series development.

“The kids and family space has a long history at WarnerMedia, from our legendary animation to classic motion pictures, and is now an essential part of HBO Max,” Kevin Reilly, chief content officer of HBO Max, and president of TNT, TBS and truTV, said in a statement. “We now have a top-notch team to create a slate of original content appealing to kids, tweens, young adults and the whole family.”

Nikki Reed

Separately, Max added Sarah Lyons as SVP of product experience. She previously worked for AT&T’s DirecTV unit as VP of OTT media products.

WarnerMedia executive Katie Soo, was named SVP of growth marketing, while Keith Camoosa, was named SVP of data insights and operations.

DirecTV Now’s Jess Miller was named VP of project management, while former Crunchroll executive Reid DeRamus was named senior director of business operations.

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Meanwhile, Sean Kisker, transitions to EVP and chief strategy officer for Otter Media and WarnerMedia direct-to-consumer. He will work with Josh Walker, chief strategy officer and EVP of financial planning, WarnerMedia Entertainment.

“We have gathered an all-star team of executives whose innovative contributions have directly advanced the digital media industry,” said Tony Goncalves, CEO of Otter Media.

 

AT&T CEO Defends Media Strategy, Including John Stankey as Possible Successor

Facing a boycott of sorts from an activist investor calling for senior management changes at AT&T, CEO Randall Stephenson Sept. 17 sought to outline to Wall Street why the telecom under its current management is on the right path in a rapidly changing media landscape.

Speaking Sept. 17 at Goldman Sachs 28th Annual Communacopia confab in New York, Stephenson said his decision to spend hundreds of billions of dollars acquiring satellite operator DirecTV and Time Warner was based in part on an evolving in a digital ecosystem.

“If you had asked me that question five years ago, I’d be hard-pressed to say it makes sense, in the old world,” he said. “In the new world, it makes all the sense in the world. We believe people are going to spend more and more of their day watching premium content.”

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Stephenson said AT&T has more than 170 million “customer relationships” requiring more bandwidth and connectivity to consume content, which is why he spearheaded the telecom’s $85 billion acquisition of Time Warner two years ago and the $67 billion purchase of DirecTV in 2015.

AT&T also operates 5,500 retail stores nationwide.

But it was those acquisitions, which have ballooned AT&T’s debt exponentially, while at the same time DirecTV and AT&T U-verse continue hemorrhaging subscribers (1 million this year) that led investor Elliott Management, who owns a $3.2 billion stake in AT&T, to write a letter to the board seeking changes.

Specifically, Elliott CEO Paul Singer wants Stephenson and COO John Stankey, who is also CEO of WarnerMedia, replaced.

Stephenson, who says the board will “evaluate [the letter] and see what makes sense for our shareholders,” says the content creation business is changing dramatically — moving from a linear TV distribution business model to over-the-top video.

The executive says WarnerMedia is uniquely qualified to meet the challenge with both himself and Stankey in their current positions.

“It’s a hard play to take a legacy company on legacy distribution models and make a pivot into digital distribution,” Stephenson said. “[Stankey] has done a really nice good job breaking down the [intra-company] silos. He’s got experiences that are long, wide and deep.”

“[WarnerMedia] is one of the largest-scaled TV and film production studios in the world,” he said, adding that AT&T has now become the largest distributor of HBO in the world, including 66% bigger than the premium channel’s No. 2 distributor.

Stephenson said acquiring Time Warner was due to the fact the media distribution world was changing and not growing on legacy pay-TV platforms, but rather digital platforms.

“We’ve had to reorient the business,” he said.

AT&T, Starz Ink New Carriage Agreement, Including OTT Video

AT&T and Starz, a Lionsgate company, Aug. 30 announced a new multiyear content carriage agreement. The deal secures rights for AT&T to offer the full suite of Starz and Starz Encore premium linear and HD channels, on-demand, HD on-demand to subscribers of DirecTV, AT&T TV (formerly DirecTV Now) and U-verse video platforms.

“Our customers want more choice and value in addition to compelling entertainment in our channel offerings,” Daniel York, chief content officer, AT&T Communications, said in a statement.

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“Starz is pleased to have found a mutually beneficial way to extend our relationship over the next several years to give millions of AT&T subscribers access to our acclaimed premium original content and vast library of blockbuster films,” said Jeffrey Hirsch, Chief Operating Officer of Starz. “By working together, both companies are in a position to continue to deliver great value to our shared customers.”

AT&T CEO John Donovan Retiring Oct. 1

John Donovan, CEO of AT&T’s communications segment, which includes wireless and troubled DirecTV and DirecTV Now, has announced he is retiring on Oct. 1.

AT&T has not named a successor, although media reports suggest Lori Lee, CEO of AT&T’s Latin America operations and global marketing officer, could assume Donovan’s position and become the telecom’s most senior female executive.

The 58-year-old Donovan, who has been with AT&T since 2008, helped spearhead the telecom’s $48.5 billion acquisition of satellite TV operator DirecTV in 2014.

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With that service now projected to lose about 2 million subscribers annually to alternative distribution services such as SVOD and online TV, AT&T is struggling to reshape a traditional pay-TV distribution business in the rapidly changing over-the-top video ecosystem.

And simply launching online platform DirecTV Now hasn’t been the answer. The service continues to lose subscribers who signed up for the initial loss-leading $34.99 monthly fee. That fee has been upgraded to $39.99.

Last month AT&T said it was changing the service’s name to AT&T Now. Subsidiary WarnerMedia is launching HBO Max early next year, while continuing to operate HBO Now in its current form in the interim.

Indeed, consumer choice for accessing home entertainment continues to evolve — driven in large part by the actions of Netflix, Amazon Prime Video and Disney-owned Hulu.

Craig Moffett, an analyst for research firm MoffettNathanson, lauded Donovan’s telecommunications contributions to AT&T, while tempering praise with market realities in the overall home entertainment market.

“It’s the entertainment businesses that are the problem,” Moffett told The Wall Street Journal.

Sony Downsizing PlayStation Vue?

Sony Interactive Entertainment reportedly is scaling back its involvement with local television affiliates for its branded PlayStation Vue online TV service.

Cord Cutter News, citing emails sent to affiliates from Sony, said the 4-year-old platform is looking to “deprioritize” Vue in marketing efforts across third-party websites.

Launched in 2015, the same year as Dish Network’s pioneering SlingTV, Vue has struggled to generate significant subscriber scale. The platform reportedly has about 800,000 subs — which pales in comparison to Sling’s 2.3 million.

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In fact, Vue also trails DirecTV Now, which AT&T is rebranding as “AT&T Now,” YouTube TV and Hulu with Live TV.

Vue in July upped the monthly fee of its basic plan by $5 for existing subscribers to $50 monthly, with additional programming tiers “Elite” and “Ultra” priced at $65 and $85, respectively.

A rep from Sony Interactive Entertainment wasn’t immediately available for comment.