AT&T: DirecTV Now Will Be a Game Changer

AT&T’s planned over-the-top offering, DirecTV Now, slated to debut by the end of the year, will be a game changer, chief financial officer John Stephens told analysts Thursday, luring customers who have managed to resist the temptation of a pay TV subscription with a streaming video option chock full of on-demand and live content.

AT&T first announced plans for DirecTV Now in March. But the company has offered little in the form of additional detail since then.

On a conference call with analysts to discuss second-quarter results, Stephens didn’t offer much more insight, rattling off a litany of AT&T’s strengths, including its wireless and wireline networks, its position to take advantage of 5G, and its status as the largest pay TV provider in the country.

“And we’re about to introduce an OTT product that we believe will be a game changer,” Stephens said. “We expect the millions of people who don’t now subscribe to a video service and prefer a streaming option will be impressed.”

Stephens added that the company was moving forward in developing the necessary technology and assets for the OTT product, including securing necessary stacking rights. He added that AT&T wants to make sure that the product goes off without a hitch at launch.

“We are confident in that process and feel good about targeting the end of this year to get that out,” Stephens said.

The DirecTV satellite service has performed well since AT&T purchased it last July, and Stephens said the telco is on track to realize about $1.5 billion in run-rate synergies from the merger by the end of the year and $2.5 billion by the end of 2018. DirecTV added 342,000 net new subscribers in the second quarter, but it was not enough to offset losses of 391,000 customers at its U-Verse TV wireline service. AT&T has been steadily moving its U-Verse TV customers over to the DirecTV platform. At the end of the second quarter, 80% of its domestic video business was on DirecTV, the company said.