AT&T says it’s raising the price of its DirecTV Now streaming pay-TV offering to $40 for the basic service and $75 for a premium package, a $5 per month increase. The rationale: “. . .we’re bringing the cost of this service in line with the market,” AT&T said in a statement to Engadget.
For the last year, AT&T has assured regulators that its Time Warner acquisition wouldn’t give it an unfair level of control over the broadband and media markets and lead to higher prices. But ill-timed moves like this one prove that AT&T will unapologetically leverage its distribution channel and content acquisitions in ways that raise prices not only for AT&T subscribers but for all pay TV subscribers.
“One of AT&T’s key arguments for the Time Warner merger was that DirecTV’s business was falling apart as cord cutters and the new competitive pay-TV landscape took on the business,” tweets the Open Market Institute’s Matt Stoller Monday. “Turns out DirecTV is so weak that it is . . . raising prices.”
A study of the AT&T/Time Warner merger by Berkeley economics professor Carl Shapiro found that TV consumers could be paying as much as $571 million in additional TV fees by 2021. This mainly comes from AT&T charging other pay-TV companies more to license popular Time Warner content like HBO and CNN. The pay TV providers then pass the costs onto consumers. AT&T objects to this analysis, saying it fails to recognize that prices are set through “the realities of bargaining in the industry.”
AT&T, meanwhile, has already announced plans to, in one expert’s word, “weaponize” the Time Warner video assets in different ways. Its new (daftly named) WatchTV service will stream popular Time Warner video at no cost to subscribers’ monthly data allotment, which will immediately make it much harder for competing video players like Hulu and Netflix to get in front of the eyeballs of millions of AT&T wireless customers.