Matt Daneman

The many virtual MVPD introductions last year, including AT&T's DirecTV Now and rival services from Hulu and YouTube, were to blame for an accelerated drop-off in AT&T's video subscriber base, CEO Randall Stephenson said at an investor conference. He said the decline rate should be more typical this year, as pricing is being rationalized between virtual MVPDs and the traditional market. He said between DirecTV and DirecTV Now, AT&T has about the same 25 million subscriber base that the company had when it bought DirecTV, and the introduction last week of its WatchTV skinny bundle streaming service (see 1806210037) could help further increase video subs. Stephenson said AT&T's aim with its Time Warner buy was "a modern media company" that has premium content, high-speed network capabilities, advertising technology and direct-to-consumer relationships. "The days of wholesaling content [via MVPDs] isn't a sustainable business model anymore," he said. AT&T plans within 24 months to build a real-time exchange for premium video ad content that it envisions outside parties also taking part in, he said (summary here). Chief Financial Officer John Stephens said AT&T anticipates getting back to "more normal historical levels" of debt by 2023. The executives said Thursday the move to 5G for AT&T will be akin to a software upgrade and not require extensive capital spending because of investments the company already is making, with the carrier equipping cellsites for 5G as part of the FirstNet rollout. Stephens said its fiber network now reaches about 9 million locations and should reach 14 million by this time next year. The company said its FirstNet buildout should be halfway completed within a year. American Enterprise Institute visiting scholar Mark Jamison blogged Friday that vertical mergers like AT&T/TW are motivated by network operators' huge capital spending in recent years and that they're facing having to do more for 5G. He said with network firms borrowing to finance expansion, while downstream firms generate cash off those networks, vertical mergers let network operators access that cash, leading to better innovation and company finances.

Many media and telecom interests concerned about consolidation tell us Disney and Comcast's duel for Fox's non-broadcast assets (see 1806130036) presents equally unappealing options. Programmers, especially small ones, have concerns about either deal, Public Knowledge Senior Counsel John Bergmayer said. Disney/Fox would be "absolutely horrible," Comcast/Fox even worse, said American Cable Association President Matt Polka. Comcast rejected such assertions. Wednesday, Disney upped its bid, topping a competing one from Comcast (see 1806200015).

The AT&T/Time Warner verdict doesn't alter that Disney has an easier and quicker path to regulatory approval for buying Fox's nonbroadcast assets than Comcast does, Disney CEO Bob Iger said on an analyst call Wednesday after the company said it sweetened its offer for Fox's assets. Iger said Disney worked with regulatory authorities around the globe for the past six months "and made a lot of progress" toward approvals.

The U.S. District Court decision last week greenlighting AT&T buying Time Warner (see 1806120060) was center stage at a Technology Policy Institute event Tuesday, with some experts saying it paves the path for more vertical deals, and others questioning its antitrust significance. If the government had prevailed, regulatory approval of deals like Comcast/Fox or Disney/Fox would have been more a question mark, but the decision's emphasis on empirical analyses helps such cases, said Christopher Yoo, University of Pennsylvania Law School Center for Technology, Innovation and Competition director.

U.S. District Judge Richard Leon giving a thumbs up to AT&T buying Time Warner (see 1806120060) isn't precedent-setting and shouldn't affect how DOJ looks at other potential vertical mergers, experts said on C-SPAN's The Communicators, to be telecast Saturday and now online. "I don't think this is a referendum on vertical mergers," said Joshua Wright, executive director-Global Antitrust Institute, George Mason University. The American Antitrust Institute, which opposed the deal, wants Justice to appeal. FCC Chairman Ajit Pai, meanwhile, said separately he will continue judging deals case by case and vertical combinations are neither necessarily good nor bad (see 1806140049).

The satellite industry globally had revenue of $268.6 billion last year, its third straight year of low-single-digit percentage growth, and the U.S. share at $113 billion marked a third year of similar growth, the Satellite Industry Association's reported Wednesday. Bryce Space and Technology prepared the report. SIA said of the 1,738 satellites in orbit as of year's end, commercial communications accounted for 31 percent and earth observation another 29 percent, by far the biggest categories. It said 345 commercially procured satellites were launched last year, more than double the 126 in 2016, with cubesat traffic driving most of that. Bryce Senior Program Manager Anton Dolgopolov said cubesat traffic likely would be similar this year, as long as launch availability doesn't get constricted. The eight total geostationary orbit satellite orders of 2017 are "a disproportionately low year" and could be an anomaly since there have been eight orders so far in 2018, said Bryce CEO Carissa Christensen. Roughly half of those 345 were earth observation satellites, SIA said. Christensen said venture capital funding of smallsats gravitated toward earth observation first, and now those constellations are starting to be deployed while communications smallsats are in the planning and development stages. 2017 was the second year of double-digit revenue growth for earth observation, and the completion of some constellations should mean an even higher growth rate this year, SIA President Tom Stroup said. Satellite broadband revenue rose 4 percent and subscribers gained 5 percent to roughly 2 million, SIA said. Stroup said the industry has been constricted on capacity, but recent launches of high-throughput satellites by ViaSat and EchoStar should allow bigger satellite broadband subscriber growth this year. U.S. operators had notable revenue drops in DBS and growth in managed services, SIA said. It said the average price per kilogram for launch dropped 40 percent from 2016, due to cheaper SpaceX launches and fewer expensive United Launch Alliance Delta IV rocket launches than in 2016. The Russian launch industry continues to lose market share as reliability concerns scare off potential customers, along with a deliberate pull back on commercial activity and a focus more on supporting the Russian national space program, said Dolgopolov. SIA said launch industry revenue fell 16 percent to $4.6 billion, and the U.S. had the largest share of commercially procured launch revenue at 39 percent.

Whether DOJ will appeal a U.S. District Court rejection of its attempt to block AT&T's $108.7 billion buy of Time Warner isn't clear, with antitrust and law experts split. "DOJ would be crazy to appeal Judge [Richard] Leon's decision," emailed Nebraska College of Law assistant professor Gus Hurwitz. But, Larry Downes, Georgetown University Center for Business and Public Policy project director, said Justice is more likely than not to pursue an appeal, even one it thinks it can't win, because that gives Justice leverage it trying to force the companies to agree to conditions that would mitigate anti-competitive worries.

Chiding the government's case being, in part, "gossamer thin," U.S. District Judge Richard Leon of Washington rejected (see 1806120002) DOJ's lawsuit Tuesday seeking to block AT&T buying for $108.7 Time Warner. Leon also urged Justice not to seek a stay of his ruling if it appeals, saying the department would suffer no harm if the deal were allowed to go through in the meantime. He said the companies -- in the form of a $500 million breakup fee and the looming June 20 deadline for consummating the deal -- would suffer "irreparable harm" and a stay would be "manifestly unjust."

AT&T's planned $108.7 billion purchase of Time Warner got the green light Tuesday from U.S. District Judge Richard Leon of Washington. as he ruled in favor of the companies in rejecting DOJ's antitrust complaint seeking to block the deal. Leon announced his decision this afternoon to a packed courtroom.

Commissioners were in lockstep Thursday as they approved a high-band Further NPRM, though there was a party-line rift over the pre-auction limit of 1250 MHz of millimeter-wave spectrum that any party can buy at auction. The agency is sending "confusing signals" to industry given those limits and yet not committing to a time frame for making available more spectrum, said sole Democratic Commissioner Jessica Rosenworcel, who dissented in part. Her support of the pre-auction limits was unclear (see 1805250058). The FCC said there was no substantive changes from the draft, but the approved item wasn't released Thursday. Commissioners also Thursday approved a telecom discontinuance streamlining order and six other items (see 1806070021).