AT&T Will Retain U-verse TV, Won’t Force Customers to Switch to DirecTV

DirecTV AT&T

CFO John Stephens defends $67 billion deal for satcaster as offering synergies and opportunity 'to redefine the industry'

AT&T will not force U-verse TV customers to take DirecTV service, if the telco’s $67 billion deal for the satcaster goes through, CFO John Stephens said.

“Customers will have their choice,” said Stephens, speaking at the J.P. Morgan Technology, Media and Telecom Conference. “They can stay on U-verse. This transaction is not based on freeing up wired capacity.”

AT&T at the end of March 2014 had 5.7 million U-verse TV subscribers, making it the fifth-biggest pay-TV provider in the U.S. “Our customers are very happy. They’re voting with their feet to stay with us,” Stephens said, noting that the telco has been adding about 200,000 TV subscribers per quarter.

SEE ALSO: AT&T, DirecTV Deal Details Emerge as CEOs Sell Merger Benefits

Asked why AT&T did not pursue an acquisition of Dish Network, Stephens said that would have likely presented a bigger regulatory challenge given Dish’s spectrum holdings and broadband strategy.

AT&T investors have pushed the stock down 3.3% since the DirecTV deal was announced Sunday, closing at $35.50 per share Tuesday. Stephens defended the DirecTV deal as “a rare opportunity to redefine the industry,” with new bundles across new screens. “Together… we believe we can accelerate growth and make investments and do things we wouldn’t otherwise be able to do,” he said.

AT&T’s agreement with DirecTV includes a provision that allows the telco to walk away from the deal if DirecTV does not renew the “NFL Sunday Ticket” exclusive football rights deal. For now, the ball is in DirecTV’s court to negotiate an extension with the league, Stephens said, adding that comments from NFL officials about renewing a deal with the satcaster were “encouraging.”

Down the road, he said, the combined AT&T-DirecTV will be able to offer the NFL — and other programmers — an opportunity to provide something no other company can to distribute content across TV and multiple wireless devices.

After the DirecTV deal closes, AT&T expects to achieve $1.6 billion in annual cost synergies in the third year. That will reduce programming costs, Stephens said, but also will reduce expenses in operational areas such as billing, customer service, set-top box development, strategy costs and advertising.

SEE ALSO: Meet DirecTV’s New Boss: AT&T Chief Randall Stephenson

On the broadband front, Stephens said the U-verse fiber-to-the-node network has runway to increase speeds. U-verse provides up to 45 megabits per second speeds now, with plans for 75 Mbps and higher.

AT&T expects to expand its advanced IP wireline network to 57 million households by the end of 2015, and with the DirecTV deal the telco has committed to expanding broadband to an additional 15 million homes. In addition, AT&T has announced plans to deploy 1-gigabit-per-second fiber networks in Dallas and up to 100 communities in the U.S.

Going forward, AT&T sees an opportunity to launch over-the-top video services given the telco’s broadband and wireless footprint. “That’s a natural,” Stephens said. “That will be a national force.”

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  1. Merrie Leigh says:

    Don’t believe everything that’s promoted. We are AT&T customers who experienced an $80.00 increase in our bill and were told Direct would be the best option at a much lower price. Well, we did switch, today, and many of our favorite channels are not carried. What a BUMMER. There’s also a 2 yr. contract involved. We “assumed” our favorites would be included in the transition, but how wrong we were.

  2. Dean Reynolds says:

    How about fixing the current U-Verse problems with “picture freezing”. It is a winter problem and several linemen have told me that there is water inside the lines and when the temp goes below freezing then we get “picture freezing. They said the only way to fix it is to replace the lines. U-Verse said replacing the lines would be too expensive and not enough customers in my area. I believe there are 130 to 150 homes in our addition.

  3. Dianne Martin says:

    I love my ATT U-verse TV. However I am very disappointed that it does not carry the Hallmark Channel. If it did I think u-verse would be just about perfect! My hope is that since Direct TV carries the Hallmark Channel, once this plan goes through, U-verse can carry it also. Many, many U-verse customers would be delighted!! I can only hope! Please consider this for the future of this plan. Thanks.

    • Depends on what tier of u verse you have. Don’t know if it’s the area you live in, but I’ve had it since I first subscribed to u verse…..never switch to Dish. Don’t think they carry local news channels, or at least they didn’t use to. My Hallmark Chanel is 365.

    • Gayle Meise says:

      u-verse channel 366 on my pc is Hallmark and I have the least costly programing on the market.

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