Discovery Signs New Carriage Deal With AT&T

Networks will be available on DirecTV Now OTT service
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Discovery Communications said it signed a new long-term carriage agreement with AT&T.

Discovery said the new deal distributes its networks to DirecTV and U-verse subscribers on more platforms than under previous agreements. Discovery networks will also be available on DirecTV Now, the over-the-top service AT&T plans to launch in the fourth quarter.

Financial terms were not disclosed.

Affiliate fees have been under pressure as distributors have consolidated. Viacom and Scripps Networks have taken hits recently as new deals have kicked in. But analyst Michael Nathanson said he didn’t believe that Discovery’s affiliate fee growth would slow because of the new AT&T agreement.

“Discovery’s prior deal with DirecTV occurred in 2012 - over this time, Discovery’s ratings have meaningfully increased.  With both Comcast and AT&T DirecTV now under contract, Discovery has completed deals with the two biggest MVPDs which should set the pricing framework for the rest of its renewal cycle,” Nathanson said.

Nathanson also noted that on its 2Q earnings call, Discovery raised its revenue forecasts even as it was negotiation a deal with a big distributor.

Discovery CEO David Zaslav, on the call, talked about “the favorable price increases and step ups we have garnered in all of our recent domestic renewals, together they will register strong growth even assuming universe declines in some markets.”

Nathanson expects, Charter/ Time Warner Cable to be the next deal to come will be the next major deal to come up over the next 1-2 years

Under the new AT&T deal, content from Discovery will be available via set-top boxes, streaming and temporary download via TV Everywhere. 

“We are extremely pleased to announce a comprehensive long-term agreement with AT&T, that provides customers with continued access to Discovery’s portfolio of loved brands across AT&T’s linear and digital platforms,” said Eric Phillips, president of domestic distribution at Discovery Communications. “We are pleased that we were able to get a win-win deal done with the largest distributor in the country. Our agreement greatly expands the AT&T platforms that will distribute our award-winning content, including future distribution on DirecTV Now for our portfolio of brands.”

“Discovery Networks’ exceptional content adds tremendous value for AT&T’s DirecTV, DirecTV Now and U-verse customers who will now be able to enjoy it on virtually any screen,” said Dan York, chief content officer for AT&T. “By adding the Discovery networks to the growing DIRECTV Now lineup, we are continuing to build a streaming service for the connected generation that we believe will be second-to-none in the industry."

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