The free-for-all to acquire Hulu might be turning into a tag-team match. Telco titan AT&T is considering a partnership with the Chernin Group, founded and run by ex-News Corp exec Peter Chernin, to make a run at the streaming service, AllThingsD reports. AT&T isn’t among the seven bidders for Hulu that emerged last month, but the Chernin Group is. In fact, Chernin helped create the premium video service with he was at News Corp, which co-owns Hulu with Disney and Comcast. The LA-based Hulu board began seeking the latest round of bidding in March and is expected to make its next move in the next several weeks.
This is a nightmare scenario for broadcasters, although it appears from The Wall Street Journal’s report this morning that no deals are imminent. The story says that Aereo — the controversial Barry Diller-backed service that streams broadcasters’ over-the-air signals to its subscribers — has been chatting with companies including Dish Network and AT&T about potential package deals. Citing “people familiar with the matter,” the story says AT&T could offer broadband customers a deal that includes Aereo’s TV programming. Dish also could use Aereo as part of a small and low-cost package of channels that it would stream to subscribers. These ideas likely won’t move beyond the talking stage as long as broadcasters — including all of the leading networks — are asking the courts to rule that Aereo infringes on their copyrights. They say it appropriates their programming without their permission, and without paying them a dime. Aereo counters that it merely streams local signals that broadcasters already provide for free to anyone who has an antenna.
A coalition of broadcasters, wireless providers, and chip makers Thursday urged the FCC to adopt guidelines to minimize potential conflict between broadcasters and wireless companies as the agency strives to cope with rising stress on bandwidth. Because of ever-increasing …
AT&T delighted Internet enthusiasts, but not its shareholders, today by announcing the three-year investment effort. The company says it will expand its U-verse TV, broadband, and voice rollout by one-third making it available to 33M “customer locations” by the end of 2015. There’ll be a lot more fiber optic cable in the system, enabling it to accommodate faster broadband speeds. In addition, AT&T will expand its 4G LTE network to cover 300M people by the end of 2014 — up from current plans to reach 250M by the end of 2013. “This is a major commitment to invest in 21st Century communications infrastructure for the United States and bring high-speed Internet connectivity — 4G LTE mobile and wireline IP broadband — to millions more Americans,” CEO Randall Stephenson says.
Shares are up about 1% in pre-market trading after AT&T reported that gains in its wireless and digital operations outweighed the losses in its conventional wired phone business in Q2. The company reported net income of $3.9B, up 8.7% vs the same period last year, on revenues of $31.6B, +0.3%. The revenue figure was just a little behind the $31.7B that Wall Street expected. The latest figure would be +2% if you strip out AT&T’s Advertising Solutions business which it sold in May. But the earnings, at 66 cents a share, were well ahead of the 63 cents analysts forecast. The company says that wireless data revenues grew 18.8%, or $1B from last year. AT&T had 105.2M wireless customers, up 1.3M in the quarter. With 5.1M smartphone sales in Q2, about a third of AT&T’s post-paid customers now have a 4G-capable device. The telecom giant also says that it added 155,000 U-verse TV customers, bringing the total to 4.1M. About 90% of the new TV customers also subscribe to the U-verse broadband service.
Company watchers have been waiting to see what former Justice Department anti-trust chief and New York City schools chancellor Joel Klein will do at News Corp — when he isn’t helping Rupert Murdoch to manage his UK scandals. The partial answer, announced this morning, is a collaboration with AT&T to offer digital products for K-12 teachers, students and their parents. Although short on details, AT&T Mobility CEO Ralph de la Vega says they “plan to bring to market a 4G mobile tablet-based experience that we believe will significantly enhance teaching and learning.” Beginning in the upcoming school year, the companies say, AT&T will “provide 4G tablets, device management and technical services, and connectivity over the AT&T Wi-Fi network and AT&T 4G network.”
It depends on whom you ask as Wall Streeters look for hidden meaning in a letter that AT&T sent to the FCC late last week. The issue at hand is excruciatingly technical: Regulators are considering whether to grant Dish additional time to provide broadband services on some spectrum it wants to buy. Without a waiver, Dish would have to serve 100M people within three years. AT&T urged regulators to reject Dish’s plea, saying that the public would benefit from the fast build-out while a delay would “confer a substantial windfall on Dish.” What’s interesting is the possible subtext. Credit Suisse’s Stefan Anninger sees the letter as a clear sign that AT&T is salivating over Dish’s spectrum following the collapse of the phone giant’s merger plan with T-Mobile. If the government imposes tough build out requirements on the satellite company then it ”could increase Dish’s interest in selling/dealing its spectrum,” he says. He believes that AT&T is interested in “increasing its negotiating leverage when it comes to a potential transaction negotiation with Dish.” But Breen Murray Carret analyst Todd Mitchell says the letter is “a clear indication that an AT&T acquisition of Dish is not in the cards in the immediate future.”
Dish is up 9.1% in afternoon trading partly based on a theory that the satellite company is in AT&T’s sights now that it has abandoned its effort to merge with T-Mobile. Stifel Nicolaus’ Christopher King is among the analysts who say that it makes sense: AT&T craves spectrum, but it has few places to get it. The Justice Department and FCC nixed the idea of a merger with another wireless phone company. Cable operators also are out after their recent agreement to sell the spectrum they control to Verizon Wireless. That would seem to leave Dish, even though it was one of the loudest opponents of AT&T’s deal with T-Mobile. Dish founder Charlie Ergen has been amassing spectrum — including some in the 700 megahertz band, which is where AT&T is building its 4G network — to help create his own national broadband and video-streaming service. The satellite company has said that it would like to find a partner to help pay for his ambitious plan, and identified T-Mobile as a possibility. And even though Ergen says Verizon and AT&T need another competitor, he didn’t rule out a deal with AT&T when asked last month about the possibility. “If the merger is not allowed then it could be” an option, he said in a conference call with analysts.
For the last week or so we’ve been fascinated by the possibility that Verizon will create a streaming video business. But don’t forget Dish Network, which also owns Blockbuster video. “If Verizon can do it, why can’t we?” Dish Network CEO Joseph Clayton asks Bloomberg. He added that “there’s not a lot of infrastructure you have to put in place for this. The expense is the programming.” Dish is already talking to TV networks about potential licensing deals. Dish also wants to amass wireless spectrum so it can do an end-run around cable and phone company broadband services. Clayton notes that Dish has more opportunities now than it did just a few weeks ago to forge partnerships that might give it better access to the airwaves — and offer a full range of video, voice, and data services.
T-Mobile is a potential ally if its merger with AT&T collapses following Justice Department and FCC attacks on the $39B deal. That appears more likely today: Justice put its antitrust case against the companies
You rarely see a company that does as much business with federal regulators as AT&T does attack them as ferociously as the phone giant did today. AT&T is livid over an FCC staff study that concluded its $39B wireless phone acquisition of T-Mobile would be anti-competitive and result in lost jobs. The report, released yesterday, ”is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis,” AT&T Senior EVP External & Legislative Affairs Jim Cicconi said in a blog post. He adds that the report “cherry-picks facts to support its views, and ignores facts that don’t,” and “treats its own speculations as if they were fact.” Calling the staff effort ”not the fair and objective analysis to which any party is entitled,” Cicconi also blasted the FCC for releasing the document. AT&T withdrew its merger application at the agency after the FCC moved to block it, although the phone company hasn’t formally abandoned the effort to acquire T-Mobile. By making the report public, he says, the FCC showed that “this was intended more for advocacy and to impact public perceptions. And neither is a proper basis for action by a regulatory agency.”
UPDATE, 11:30 AM: DirecTV shares are up 6.3% after it reported better-than-expected sub growth in 3Q — and a three year extension of its deal with AT&T to sell co-branded TV, broadband, and wired and wireless phone services in 22 states. The agreement, which now runs through March 2015, covers areas where AT&T does not offer its U-verse video service. There’s “no material change” in the terms, DirecTV CEO Mike White told analysts in a conference call. He added that it’s “too soon to say” whether DirecTV will offer more bundles with Verizon broadband services. ”The question will be how customer friendly the (Internet usage) caps are.” White says he talks to everybody about packaging broadband service with DirecTV — and that could include Dish Network if it uses the wireless spectrum it’s amassing to sell a wireless Internet service. DirecTV is “thinking