Dish open to merging satellite TV business with AT&T's DirecTV: report

Discussion in 'DIRECTV General Discussion' started by icr2002, Jun 7, 2019.

  1. Jun 11, 2019 #61 of 158
    NashGuy

    NashGuy Active Member

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    Yep, on YouTube TV it's only CBS-owned networks (CBS, Pop, CBS Sports Network, and maybe The CW) where the day after you record a show, it gets replaced with the VOD version in which the ads can't be skipped. But if you watch the same day you record, you get the cloud DVR version and can skip the ads.

    With all the other channels, you always have a choice between the cloud DVR and (if it exists) VOD version. Unless you watch a ton of CBS stuff, it's probably not a big deal. (And given that CBS seems to appeal more to older people and streaming services appeal more to younger people, it's probably not a huge inconvenience for YouTube TV customers.)

    With DirecTV Now's "True Cloud DVR" they never replace recordings with VOD on any channel and you can always skip through the ads. But, as of right now, your storage is limited to only 20 hours with a 30-day auto-expiration on recordings. That will change, though, when the service gets relaunched around August. Look for one or more upgrade options to substantially expand the number of hours and time limit.
     
  2. Jun 11, 2019 #62 of 158
    TV_Guy

    TV_Guy New Member

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    What makes the add insertion so irritating is the number and length of adds on CBS. I watch a few shows on CBS and try to watch them before it switches to VOD. It does discourage people from viewing the VOD. The wackiest add insertion is the CBS All Access version with so called limited commercials. When I had a free 2 month trial I mistakenly opted for the limited commercial version due to a glitch in the sign up process. The commercials are so intrusive that unless you really want to see a show you are unlikely to even start the app. Don't know how many people pay $5.99 a month to be subjected to a barrage of ads.
     
    Last edited: Jun 11, 2019
  3. Jun 11, 2019 #63 of 158
    NashGuy

    NashGuy Active Member

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    I think you're on the right track with the assumption that the deal would involve some sort of co-ownership and cooperation between the two sides. But I don't see AT&T spinning off their streaming TV services to DISH too. Just the DBS.

    As I've stated before, I think AT&T will soon unveil a restructured channel package line-up based on their recently renegotiated carriage contracts with the cable networks. These new packages (Plus, Max, etc.) will be the only options offered to new customers on both their new streaming platform (DTV Now, rebranded as AT&T TV) and their DBS platform, DTV.

    What if a deal to sell majority ownership and day-to-day operations of DTV to DISH came with the condition that DISH must honor the recently negotiated network carriage contracts that AT&T has put in place for it? The DTV brand would stick around for a few years and would have to keep the new packages with the prices that AT&T sets for them. Those same packages would be sold on AT&T TV and both sides would benefit from the large combined subscriber base economies of scale for those few years, until, say, 2023-24, when the carriage contracts run out.

    Basically, what would happen is that DTV's operating income would be split between both DISH and DTV. And at the same time, both companies would be free to cannibalize the DTV user base. AT&T would try to get DTV subscribers, especially those already getting home broadband service from AT&T, to switch over to AT&T TV with its lower prices, AT&T bundling discount (which would be gone from DTV), next-gen cloud DVR, and Android TV-powered box with lots of apps. Keep in mind that AT&T has a home broadband (AT&T Fiber and AT&T Internet) subscriber base of about 15 million and counting. They'll shift all of their Uverse TV subs (~3.5 million) over to AT&T TV and try to get all of their subs with both DTV and AT&T broadband shifted over to AT&T TV too.

    Meanwhile, DISH would aim to get DTV subscribers to switch over to a DISH package (e.g. America's Top 200, etc.) with a new 2-year contract, on which DISH would receive 100% of the operating income. DTV customers might not even have to switch out any of their installed hardware (STB, rooftop dish, etc.) when switching to a DISH package, as DISH would be able to simply authenticate their receivers to access the appropriate channels in the DISH package delivered to them through the DTV satellites. (The DTV satellites would host all the channels included in the DISH packages.)

    DTV customers who were grandfathered into their old-regime package (Choice, Entertainment, Xtra, etc.) would have a certain amount of time (couple years?) to decide which way to go: AT&T TV, or one of the new DTV packages, or a DISH package.

    When AT&T's current carriage contracts expire in 2023-24, AT&T would have to renegotiate carriage rates based on whatever the size of their AT&T TV subscriber base would be at that point. Perhaps at that same time, DISH would fold all of the remaining DTV subscribers into the DISH brand and use that combined subscriber base as the basis for the new set of packages that they would negotiate at that time with the cable networks.

    And that's when the final part of the deal would transpire, with DISH paying AT&T to buy out the remaining portion of DTV, with a value based on its subscriber count at that point in time. The DTV brand would live on only as logos on rooftop dishes and receivers still in use but the actual operating service would be DISH and they would offer only one set of unified channel packages and prices, whether accessed through a Hopper or a Genie.
     
  4. Jun 11, 2019 #64 of 158
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    Co ownership of DIRECTV satellite is too complicated. Cooperation was proposed by DISH a couple of years ago (potentially sharing LIL transmissions between the two systems to help reduce the cost to each) but with DIRECTV moving all locals to 99 and 103 and DISH having locals on 61.5, 110, 119 and 129 sharing signals would not be easy. A deal where DISH would buy the remainder of the licenses for 110 and 119 would be "easy".

    Trying to make DISH run DIRECTV satellite at AT&T dictated prices would be a bad deal for DISH.
     
  5. Jun 12, 2019 #65 of 158
    NashGuy

    NashGuy Active Member

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    I think you misunderstood what I proposed because there's really nothing simpler than both brands continuing to operate their respective fleets of current satellites just as they are now. The only difference in terms of transmission that I mentioned would be for the current fleet of DTV sats to carry all of the national cable channels offered by DISH (which is probably already the case but, if not, there should be room on the DTV fleet to add the few that are currently missing). The reason for this would be so that existing out-of-contract DTV subs could easily transition over to DISH service/packages if they wished with virtually zero new customer acquisition costs paid by DISH. The exact rules of how that would be handled (incentives, long-term commitments, etc.) would have to be agreed on by both sides. As I said above, both DISH and AT&T would be aiming to poach DTV subs away to their own platforms during this multiyear "sunset" period for DTV.

    My assumption is that as long as DBS TV continues to exist, both fleets of sats will need to remain operational as separate systems. Because it doesn't make financial sense to spend lots of money switching out all those rooftop dishes and receivers to standardize on one system or the other.

    Well, maybe. All depends on the details, which would obviously have to be agreed upon by both sides before any deal would be struck.
     
  6. Jun 12, 2019 #66 of 158
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    Owned by one company, yes. Keep running both systems similar to SiriusXM. But under some sort of contract where DISH would have obligations to AT&T (beyond the purchase price)? No. Especially when those obligations would be harsh enough to prevent DISH from making any necessary changes to keep the system operational. A deal with ongoing commitments where AT&T dictated packages and prices would be a bad deal. DISH (or any new owner of DIRECTV) would need to honor the contracts entered before purchase (just as AT&T had to honor DIRECTV's contracts). Any poison pill contracts left by AT&T would make DIRECTV satellite unsellable. If you're looking for ways to make sure a deal would never happen you have found one.

    Are you suggesting contracting DISH to operate DIRECTV satellite while it is still owned by AT&T? That would be the only way for AT&T to maintain control over pricing and packages. The only way that would make sense is if DISH could run the system cheaper under contract than AT&T could run the satellite system themselves. Possible, but unlikely.
     
  7. Jun 12, 2019 #67 of 158
    inkahauts

    inkahauts Well-Known Member

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    It wouldn’t make sense for att to merge DIRECTV and dish unless att bought dish. I don’t see that happening.
     
  8. Jun 12, 2019 #68 of 158
    Rich

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    Ever been a "Joe Sixpack"? I have. There was a time that I just accepted what I had. I had no idea what was out there. Then came Directv and I had to learn how to do D* in order to retain some semblance of sanity (remember what it was like in the Fall of 2006?). Prior to 2006 all I cared about was baseball and beer.

    Rich
     
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  9. Jun 12, 2019 #69 of 158
    Rich

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    Mrs. Joe Sixpack sounds like an intelligent person.

    Rich
     
  10. Jun 12, 2019 #70 of 158
    Rich

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    What I've been reading has made me think Charlie Ergen wants to acquire D*. Is that wrong?

    Rich
     
  11. Jun 12, 2019 #71 of 158
    NashGuy

    NashGuy Active Member

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    Exactly. And if the new owner of DTV had to honor the carriage contracts that AT&T entered into just before they sold off DTV, wouldn't that directly affect the ability of the new owner to mess with the channel packages that were also put into effect just before the transaction? Don't those contracts tend to stipulate which channels must be included in the base package and which can be relegated to upper tiers (e.g. AT&T's new contract with Viacom states that BET, Comedy, MTV, Nick and VH1 must go in the lower priced Plus package while Paramount and TV Land can be exclusive to the higher priced Max package).

    All I'm proposing is this: later this summer, AT&T announces a new set of packages for DTV, along with their prices. Those packages would be based on the most recent set of carriage contracts that AT&T had effected (some of which were just agreed to this year).

    Now imagine a few months later that AT&T and DISH strike some sort of deal for DISH to take ownership of DTV (either partial ownership, or full, or partial now with a future option to buy the remainder). But because of the contracts in place with the cable networks, DISH would have to retain the existing set of packages on DTV until those contracts expired; during that period, those packages would continue to be marketed under the DTV brand while DISH separately continues to market their own DISH-branded packages (but with HBO and Cinemax once again available). Perhaps DISH is allowed to set whatever new customer incentives they want on the DTV packages (e.g. $200 Visa gift card when you sign a 2-year contract) but DISH is not allowed to actually lower the monthly prices of those packages below where AT&T had set them. (And, let's be honest, when have you ever seen an operator LOWER prices on existing cable packages?) Also, any AT&T bundling discounts for combining DTV with other AT&T services would be eliminated. However, DISH would have the freedom to increase DTV prices as they see fit going forward. Also, DISH might have full autonomy in setting the amount and kind of marketing/advertising done for the DTV-branded service.

    For as long as AT&T remains a co-owner of DTV, they would have full access to the current DTV (but not DISH) customer list and all their account info. (Or, should they completely sell DTV to DISH, the sales agreement would give AT&T access to that customer info for the following few years.) AT&T could use that information to target and actively sell their AT&T TV service to DTV customers and try to woo them over to it. Meanwhile, DISH could pitch whatever options they wanted to DTV subscribers, whether that's to stay put where they are or to try to woo them over to one of their own DISH-branded packages. And DISH would even have the option of beaming those packages to customers using DTV satellites, DTV dishes and DTV Genie receivers, obviating the need for a costly switchover installation. DISH would also be free to create a new model Hopper DVR designed to work with DTV installations (SWiM, etc.) in case they wanted to pitch that option to switchover customers.

    I'm not sure how any of those aspects would constitute a poison pill for DISH. But whether such a deal could happen would all come down to how much DISH would have to pay AT&T. Ergen tends to drive a hard bargain and Stephenson can't be seen taking a bath on DTV.
     
    Last edited: Jun 12, 2019
  12. Jun 12, 2019 #72 of 158
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    You are correct. AT&T could buy DISH ... it would be one way to boost subscriber numbers. But the continuing interest is DISH buying DIRECTV.
     
  13. Jun 12, 2019 #73 of 158
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    Would you buy a company with limitations that are more beneficial to the seller than the buyer? Especially if those limitations are setting up the buying company to fail? Let someone else control your price and profit while you take the losses? Hell no.
     
  14. Jun 12, 2019 #74 of 158
    NashGuy

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    From DISH's perspective, they would be paying money for AT&T to gradually cede the entire DBS subscriber base to them as opposed to the current status quo, which is AT&T continuing to aggressively compete against DISH for the same pool of current and potential customers.

    I don't understand your comment about "buying a company to fail". Make up whatever scenario you like in which DISH purchases DTV. Do you honestly think that they would forevermore operate both as separate brands? Of course not. Their own DISH brand would survive and the DTV subscriber base would simply be subsumed within it as soon as contractual obligations allowed that to happen.

    In the scenario I outlined above, DISH would be able to slowly transition the entire DTV subscriber base over to their own product. Some would voluntarily transition in the first few years (in response to special offers from DISH), while DISH basically served as caretaker for the DTV brand. But when the 2019 set of DTV carriage contracts/packages expires in a few years, however many millions of subscribers still on DTV at that point would simply be automatically switched over to the most similar DISH package. DTV would cease to exist as a brand at that point. All satellite TV customers would be DISH customers. In negotiating their future network carriage contracts ahead of that point in time, DISH would be able to count the number of DTV subscribers who would be transitioning over to them. This would give them greater scale and bargaining power.

    Yes, of course DTV subscribers (once they fulfill their 2-year contracts) would continue to have options and could choose to leave satellite TV completely. Heck, they're already doing that by the boatload. And of course other services (including AT&T TV but also including Xfinity TV, Spectrum TV, YouTube TV, Netflix, Hulu, etc.) would continue to compete for their customers and try to lure them away. That's just business and it's going to happen anyhow.

    As for "letting someone else control your price and profit while you take the losses," do you think that DTV is an unprofitable business? AT&T's numbers don't show that. So what are these losses you speak of? Yes, it's a shrinking business but it's still profitable. And whatever happens in the months or years to come regarding a future sell-off of DTV, when AT&T announces their new DTV packages and pricing soon, you can bet they're going to set them in such a way to ensure continued profitability for the service because, right now, the default plan is for AT&T to hold onto DTV for the foreseeable future.

    In all likelihood, the new packages, prices and policies are going to be constructed in a way to make the average DTV customer MORE profitable than they are now, although potentially at the expense of having fewer total DTV customers (i.e. shed the low ARPU subs). But AT&T understands that the DTV subscriber base is in irreversible long-term decline anyhow. You can make money two ways: high volume (lots of subs) with low margin (low prices) OR low volume (fewer subs) with high margin (high prices). That's a simplification, of course; there's a spectrum of pricing models in between those two ends. But based on their recent comments, it looks to me like AT&T is going to shift DTV pricing in the direction of lower volume and higher margin.

    If you're Charlie Ergen, you have to ask whether you wait several years and hope DTV has organically lost a lot of subs and can be bought at a lower price then. Of course, waiting to make a move would have its own negative impact on DISH's business in the intervening years. Who knows whether DISH and AT&T could reach a price and deal that both sides can live with now. Might still be too soon.
     
  15. Jun 12, 2019 #75 of 158
    Steveknj

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    There's where a Logitech Harmony comes in. I rarely use any remote besides that one.
     
  16. Jun 12, 2019 #76 of 158
    Steveknj

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    I just don't see AT&T committed to Satellite. I'm not saying it will be sunsetted, but more of a niche product that caters to those who have no other option. But I think the days new development for the platform are behind us, and I don't see them sinking a lot of money into it (especially with their current debt issues). I'd rather them sell to someone committed to the platform than just hold onto it and let is stagnate. And if the recent work on the platform is any indication of what they will develop, then I'm not so sure they know what they are doing anyway. This is not a primary business for them and it's obvious to me anyway that they want to be a content creator more than a content provider. But we'll see how this shakes out.
     
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  17. Jun 12, 2019 #77 of 158
    l'Aucherie

    l'Aucherie Cool Member

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    This is one of several articles which have appeared on this topic over the last several days (Google, if you want to see more.):
    The Case for a Deal Between Dish and AT&T’s DirecTV

    The general thrust of these articles is that AT&T wants to dump an under-performing Directv and Dish is said to be interested, given the present lax regulatory environment. Where there's smoke, there's fire, perhaps?
     
  18. Jun 12, 2019 #78 of 158
    Steveknj

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    Does Joe Sixpack even know about streaming? We live in our tech bubble here, but the average user who's used to doing one thing for years gonna even try something like that? Maybe 20%. Now Joe Sixpack's kids? That's a different story. They have been streaming for years. Some hardly ever watch classic TV as we know it.
     
  19. Jun 12, 2019 #79 of 158
    phrelin

    phrelin Hall Of Fame DBSTalk Club

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    The article that is referenced in the original post doesn't really say anything new:

    "Dish Network Corp is open to merging its satellite television business with AT&T Inc’s pay TV service DirecTV but the two companies have no active deal talks going on, according to a Bloomberg report seen by Reuters."​

    Dish has been open to merging, or rather talking about merging, for a while now.

    Today The Motley Fool offered two articles: Cord-Cutter No More: Why I Went Back to Cable, which tells the reader streaming isn't the solution for every household, and AT&T Isn't the Only Pay-TV Company Getting Rid of Low-Value Customers, which tells the reader if a video subscriber doesn't want to pay the standard price AT&T is happy to let them go because the services have become a relatively low-margin product for cable/satellite companies compared to high-speed internet service. Neither article tells us anything that hasn't been reported for a long time now.

    Two factors exist which will be changing things.
    1. Currently we have the relatively few larger companies acquiring most content sources in order to "offer" via streaming what we knew as "bundles" of content back in the good old days of satellite TV, bundles that got more and more expensive.
    2. Further out in time, 5G (including that supported by satellites) will effectively make streaming the only desirable choice for receiving video content. But apparently the politicians intend to screw around with the roll out, delaying its impact by as much as five years and may create costs that might plunge a knife into the hopes of rural areas to have affordable high speed internet which may prolong the life of satellite TV.
    IMHO by 2030 both cable and satellite TV as I understood them at the beginning of the millennium will be memories. But I've been wrong before.
     
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  20. Jun 12, 2019 #80 of 158
    NashGuy

    NashGuy Active Member

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    Note, however, that DISH (unlike AT&T and Verizon and every cable operator) does not have the luxury of falling back on high-margin broadband-only subscribers because all they offer is TV service. Perhaps that will change in the future if DISH finds $10 billion or more in funding to build out a nationwide 5G wireless broadband service but I'm not holding my breath on that. A more feasible scenario is just selling off that 5G spectrum to someone else (AT&T, Verizon, T-Mobile) and let them build it out.

    BTW, if you're interested in my predictions for the status of the pay TV (what we generally refer to as "cable TV") industry by 2025, click here.
     

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