uploads///Telecom U verses Video Net Additions

How Will the ATT–DIRECTV Merger Affect the Media Sector?

Shirley Pelts - Author
By

Aug. 18 2020, Updated 4:44 a.m. ET

Impact of the AT&T–DIRECTV merger on the media sector

Late last year, Comcast (CMCSA) stated that the AT&T–DIRECTV merger had created a significant competitor in the cable market, as it would allow AT&T (T) to offer bundled wireless services along with its cable services.

Comcast stated at a UBS (UBS) conference last year that the increased competition from the AT&T–DIRECTV merger was one of the reasons for its increased focus on deployment of its X1 video platform and its offering of its triple-play products according to market segmentation. The merger is also why it’s trying out the new DOCSIS 3.1 technology for its high-speed Internet service before rolling out this technology early next year.

Comcast believes that these new initiatives will allow it to better face the increased competition from the AT&T–DIRECTV merger.

Article continues below advertisement

The formidable competition from the AT&T–DIRECTV merger has also caused pay-TV operators such as Dish Network (DISH) to pursue subscribers who will stay in the long term and will be profitable. Dish’s subscriber acquisition costs have risen. Dish makes up 0.21% of the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ also has 4.7% exposure to the television space.

AT&T–DIRECTV merger

AT&T acquired DIRECTV last year for a valuation of $63 billion. During 4Q15, revenue from AT&T’s Entertainment Group was ~$13 billion. The video entertainment component represented ~71.2% of the segment’s revenue stream during the quarter.

As you can see in the above graph, on a net basis, customer losses in AT&T’s U-verse video component expanded sequentially in 4Q15. This metric for customer losses was at ~240,000 in 4Q15 compared to ~92,000 in 3Q15.

In 4Q15, AT&T’s U-verse connections in video services fell ~5.2% year-over-year, reaching ~5.6 million at the end of 4Q15.

In the next part of this series, we’ll explore the mixed reactions to Charter’s proposed acquisition of Time Warner Cable and Bright House Networks.

Advertisement

Latest DISH Network Corp News and Updates

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.