AT&T exec in charge of DirecTV, talks branding, rates, Net neutrality
NEW YORK — AT&T's $49 billion acquisition of DirecTV was formally approved Friday.
The merger puts AT&T's John Stankey in a new role as CEO of AT&T Entertainment & Internet Services, where he will run both DIRECTV and AT&T's home solutions operations. Stankey talked to USA TODAY tech columnist Edward C. Baig about what the deal means for AT&T and for consumers.
Comments were edited for space and clarity.
USA TODAY: What is your vision for the new company?
Stankey: The simple vision is we want customers to take their premium entertainment experience and enjoy it anywhere. Our job as a company that provides connectivity, whether it's fixed or mobile, is to make sure that they have that portability.
Nobody else has the kind of toolset (and) breath that we now have--scaled content, world class mobile network, broadband network, the technical compatibilities to take all that out over an IP infrastructure. That's the big strategic thrust.
And then there's the basic blocking and tackling thrust (to take) two big companies and get the benefits of being able to leverage product distribution. Remove redundancies between the two businesses and make it more cost efficient and more effective. That ultimately generates more cash. And when that cash is generated it will allow us to plow it back into building fiber and broadband.
USA TODAY: Will there be changes in branding?
Stankey: You'll see us of course start to move to make sure that people know that DirecTV is part of the AT&T family. And you'll see us evolving the branding over time. Our goal is to make sure that customers think about their entertainment with their connectivity.
USA TODAY: Back when deal was announced AT&T said it could take 12 to 18 months for new robust wireless offerings? Is that still the case?
Stankey: There's good news and bad news. The bad news is that it took a long time to get this (merger) thing approved, probably longer than it should. The good news is that it gives you a little time to think about what you want to do. And you should probably expect weeks (from now) you're going to start to see things in the market that will represent the integration and togetherness of those products. I'm not going to tell you today what the price is and what those products are but they will be out there and I think you'll be surprised by how fast we move out there. We've had 14 months to think about it. And 14 months within the bounds of the law to do some planning.
USA TODAY? Will U-verse and DirecTV co-exist?
Stankey: We sold to different customer bases. There's some overlap in the markets but we played to the bundle game with U-verse by consolidating product offerings. DirectTV played to people who wanted to buy standalone video. We now can start to cross market products and services. Over the long haul our goal is offer one video product in the market, (with) one video channel lineup, one set of programming relationships, one video brand.
To do that, we have to do integration work of the technical platforms. I wouldn't think about it as one going away or the other one going away. It's about how the two of them arrive at a new place that's better. Building that new platform is going to take us 24 to 36 months. Our goal is if you're a consumer of ours today that this transition is done in way that is evolutionary (and) non-invasive. This new platform is very software centric. We'll be able to bring the customer new features and services incrementally.
USA TODAY: Does this deal change AT&T's views on net neutrality or its open Internet policy?)
Stankey: We're still in favor of an open Internet and still supportive of rules around non-discrimination of traffic. Our issue is with Title II, it's not about whether we think the Internet should be open and fair. We think Title II is a regulatory overreach and it adds a degree of uncertainty into an investment marketplace (when the) FCC at any time can choose to reach in and reset the rules or regulate price or change performance metrics that create problems for consistency in business models. This transaction doesn't change anything about our challenge around that.
USA TODAY: What kind of clout does the DirecTV deal give AT&T?
Stankey: I think it' s nice to be able to play in a league that's closer to what a vertically integrated Comcast can play in. We don't own content like they do.
Our situation is we at least have volume scale. (It is) important to generate returns to invest in fiber and bring more broadband to customers. But we also want that ability so that we can go start working with the people who have the really attractive content to build these new distribution models. If you're talking about 26 million homes that buy video — traditional linear video — and 100 million high quality handsets and customers that are out there, many of whom have smartphones, that's a whole other opportunity to distribute content. That will allow us to do something with these guys that others who don't have this whole set of vertically integrated capabilities—home broadband, mobile, great TV product, etc. — can do.
USA TODAY? How does this benefit consumers?
Stankey: (The FCC) believed that another player in the market that had some scale would help to suppress the increase that's going on in rates. So I think consumers are going to see an economic value.
USA TODAY? Big mergers often bring job loss to the new company. What do you expect?
Stankey: Obviously, there's going to be some functions that are going to be redundant when you put two large businesses together like this. There's two treasury organizations and two legal organizations. But this is about us growing broadband and video share and making this business more competitive. That growth is going to be really good for employees who are in operating roles. When you're growing you need more technicians and more people to talk to customers on the phone and you do more investment with IT. So the vast majority of folks are going to have more than enough work to do over the next several months and years to get this business operating right, aside from some of the corporate overheads that we're going to have to manage through.
Email:ebaig@usatoday.com; Follow USA TODAY tech columnist @edbaig on Twitter