M+E Daily

CBS CEO: Company’s in Negotiations with AT&T Over DirecTV Now

CBS is “in discussions” with AT&T about taking part in the new DirecTV Now streaming television service that was recently announced, CBS CEO and president Leslie Moonves said Dec. 5 at the UBS Global Media and Communications Conference in New York.

He added: “I’m assuming that we will be able to make a deal with them. There are some issues still outstanding, but we’ve always been able to come to an agreement” with companies offering other OTT services including Sony’s PlayStation Vue in the past and “potentially” with Google for the YouTube OTT service in development.

AT&T’s new over-the-top (OTT) service doesn’t require a contract and starts at $35 a month, initially for more than 100 channels, including several of the same ones that rival OTT services are offering, with networks including AMC, several Discovery Communications networks, Disney Channel, ESPN and TBS. But CBS is among the networks glaringly absent from the initial list of included networks on DirecTV Now.

As has been the case with negotiations over participation in other OTT services, CBS is “negotiating to get the appropriate price” for its CBS and Showtime networks before agreeing to be included in DirecTV Now, Moonves told the conference. There are other issues beyond just economic ones also, he said, pointing to “digital rights and stacking rights and all those sorts of things that are in play.”

Asked if he believed the virtual multichannel video programming distributors (MVPDs) will be successful, Moonves predicted that “some of them will,” without specifying which ones. It will come down to what packages they offer, he said, adding that he didn’t quite understand all the packaging DirecTV Now is offering. For instance, despite widespread reports that CBS isn’t included, he said only some ABC, Fox and NBC affiliates are apparently included in the service.

Moonves also guessed that AT&T will initially lose money on the service at $35 a month for more than 100 channels, and will have to increase that pricing soon to make a profit. AT&T said that price will only be offered for a limited time and it will increase to $60 a month for that package, with a package of only 60-plus channels costing $35, one with 80-plus channels costing $50 and one with 120-plus channels costing $70.

DirecTV Now “could be a very viable over-the-top product and, right now” it is “attractively priced,” T-Mobile U.S. CFO Braxton Carter told the conference earlier in the day. The service “has the ability to be … the catalyst that changes everything going forward, and change is very, very good for a company like” T-Mobile US, he said.

Asked what he felt about new cable mobile virtual network operator (MVNO) entrants in general, he said these are “fascinating times,” adding that T-Mobile was “really excited to see some of the innovation that’s playing in the marketplace.”

Carter also described AT&T’s plan to buy Time Warner as “a positive” from a T-Mobile standpoint. He projected that the Trump administration will be more open to consolidation than the Obama administration.

“We want to be on every one” of the 7 billion screens that people are using, Discovery Communications CEO and President David Zaslav told the conference. DirecTV Now “could be a very compelling product packaged together” with AT&T’s mobile service, he said, pointing out that Discovery has five of its channels on the service.

Zaslav predicted: “If the existing distributors go over the top, we’re going to do very, very well because our channels will be carried, we’ll preserve the majority of our money, and people will be spending more time with us.”

He added that “most of the issue with the U.S. bundle is it’s really over-served with sports. There’s just way too much money being paid for sports. The price of cable is way too high because of sports.”

“We think we’re very well-positioned now to take our content direct to consumer” in 2017, he went on to say. Four years ago, Discovery didn’t have enough strong content that people would watch and pay for, but that’s changed and the company is seeing “meaningful growth” now and has strong IP that’s paid for, he said.

Meanwhile, it’s still just the “early innings” for Internet TV, especially outside the U.S., Ted Sarandos, Netflix chief content officer, told the conference. “We’re barely scratching the surface” now with how many people can