DirecTV Now a Break-Even Proposition for AT&T, UBS Analyst Says

The $35 per month subscription price to AT&T's DirecTV Now means that over-the-top service likely won't be a money maker, since programming costs probably will be in the low $30 range, UBS analyst John Hodulik wrote investors Tuesday. It won't come with satellite, set-top box or installation costs and could reach the cord-cutter and cord-never markets, he said. Hodulik said increased OTT competition likely will mean Comcast and Charter Communications will start seeing losses of traditional video subscribers again by 2018, but cable numbers probably will be more resilient than satellite or telco video subscribers because of the quality of cable video product, broadband bundling and the potential of cable quickly offering OTT services. Hodulik said strong DirecTV Now growth "would likely sit well with regulators concerned about the OTT ecosystem." AT&T pointed to sped-up OTT innovation as a big motivator for its planned $108.7 billion takeover of Time Warner (see 1610240011). Disney Chief Communications Officer Zenia Mucha said that "a transaction of this magnitude obviously warrants very close regulatory scrutiny."