AT&T said it would be reviewing its pay-TV programming lineup .
The company said during its earning call Wednesday morning that its that its DirecTV service was continuing to lose subscribers and that consumers appear to be interested in smaller, more specialized bundles of programming.
“We’re evaluating our program lineup. Content is the largest and fastest growing cost of any video offering,” said John Donovan, CEO of AT&T’s Communications Unit, said during the earnings call.. “We’re evaluating our channel lineups and taking a fresh look at how we can align content cost with the price.”
Analyst Douglas Mitchelson of Credit Suisse noted that AT&T has pay-TV renewals coming up with Fox, CBS, Viacom and Disney and possibly other programmers.
“Whether [AT&T] will be willing to outright drop network groups to achieve its ambitions will be closely watched," Mitchelson said in a research note.
AT&T’s Donovan said that the company is going to realign its video products in 2019.
“We’re refining our four video products, tailoring them to customer needs,” he said.
“Our mobility focused Watch TV is gaining traction. DirecTV Now is being updated to increase its simplicity and further differentiate the service. And our premium DirecTV and Uverse services focus on the traditional linear TV viewers,” he said.
He added that the company has begun beta-testing its thin-client streaming service. Trials will roll out in the first half of next year.
“We made the strategic decision to rationalize our promotions and special offers for DirecTV Wow. We’re taking a more tailored, data-driven approach. Specifically we focused on reducing promotions for low-value high-churn customers,” Donovan said.
“Since launching DirecTV Now we’ve learned a lot from our nearly 2 million subscribers about price elasticity and customer behavior with the virtual MVPD services,” he said.
“For example, we see customer behavior evolving somewhat like wireless with some customers seasonally shopping for shows,” Donovan said. “We know our customer base now and with our data we’ll continue to tweak our approach to optimize profitability and see our value proposition stabilize.’”