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What Is AT&T’s Motive in Backing Locast’s Free Streaming Service?

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Jul. 1 2019, Published 1:26 p.m. ET

AT&T backs Locast’s streaming service

On June 27, AT&T donated $500,000 to Locast, a nonprofit organization operated by advocacy group Sports Fans Coalition NY, which streams broadcast TV channels in local markets for free. AT&T is also offering access to Locast through DIRECTV and its U-verse cable service.

AT&T’s donation and its integration of its cable services with Locast seem to be acting as hedges to help it in the event of broadcast channel losses amid carriage fee disputes.

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Carriage fee disputes

Lately, carriage fee disputes have been rising as traditional media companies are putting pressure on service providers to secure better distribution deals amid declining viewership due to cord shaving and cord cutting. Nowadays, consumers have other entertainment options, which is putting pressure on cable companies’ retransmission revenues.

AT&T is a TV provider and therefore fears that station owners could pull channels during disputes. In the event of disputes over fee agreements, AT&T could seek help from Locast, which would continue to offer local broadcast channels to AT&T subscribers, if stations were to go dark on U-verse or DIRECTV. AT&T reportedly provided more than 10,000 local channel connectors to Salt Lake City customers after a local NBC affiliate went dark on AT&T’s pay-TV platform, which has been struggling to gain subscribers due to cord cutting. In the first quarter, AT&T lost net 544,000 premium TV subscribers.

AT&T is also an owner of premium channels such as HBO, TBS, and CNN. The company is currently undergoing a carriage fee dispute with Dish Network (DISH) and has withdrawn its premium HBO channel from Dish for the past eight months, which dented Dish’s subscriber base during the first quarter.

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