Consumer Advocates Say AT&T’s Planned “Skinny Bundle” Falls Short Of Addressing Concerns

By Dawn C. Chmielewski, Dade Hayes

AT&T-Time Warner
AT&T/Time Warner

AT&T plans to launch a “skinny bundle” of television channels for consumers at a cost of just $15 a month — a streaming TV service that would rank among the nation’s cheapest.

Chief Executive Randall Stephenson revealed plans for the service, to be called AT&T Watch, in testimony last week in the high-profile antitrust case. The proposed offering appears intended to allay concerns that its ownership of Time Warner would hurt consumers and competition.

AT&T Watch would be similar to the DirecTV Now service, minus the sports programming. It’s expected to launch in the next several weeks and would be free to AT&T Unlimited wireless customers, but also available to customers of other broadband and wireless services.

“These are the kind of things that we’re motivated to do as a distributor, get the bundle’s intensity down and get a skinnier, skinnier bundle into the marketplace,” Stephenson testified.

This low-cost video package would, at least in theory, benefit consumers. But consumer advocates say the proposal falls short of addressing larger anti-competitive concerns, such as whether the merger would give AT&T an incentive to withhold content from rival distributors, raise prices for competitors or wield so much bargaining clout that independents would be squeezed out of other pay TV programming bundles.

“Our concerns, which largely dovetail with the case the DOJ has made, are not alleviated in any way, shape or form by the skinny bundle PR stunt that AT&T’s CEO pulled last week,” Public Knowledge senior policy counsel Phillip Berenbroick told Deadline.

The Parents Television Counsel wants AT&T to go further to win approval of its planned $85 billion deal to acquire Time Warner. It argues consumers should have an “a la carte option,” in which consumers would determine what programming goes into the bundle. Giving consumers greater choice would obviate any regulatory concerns that the merger would cost consumers an extra $571 million annually through increased pricing.

“Unless and until AT&T allows consumers to decide for themselves which networks they want to purchase its skinny bundle answer to anti-competitive concerns should be rejected by the regulatory bodies as much ado about nothing,” said PTC president Tim Winter.

BTIG Research analyst Rich Greenfield said AT&T wouldn’t be the first to offer an inexpensive no-sports bundle — Philo did that last year, with a basic programming package of 37 channels that costs $16 a month.

AT&T Watch likely would be devoid of the major broadcast networks and related cable networks, with content from programmers such as A&E, AMC, Discovery, Turner and Viacom, Greenfield writes. It might include such digital native channels as Cheddar, which just launched on YouTube and Hulu.

What’s significant about AT&T Watch is the plan to provide the package of video channels to AT&T wireless unlimited plan subscribers at no additional cost. That could potentially result in significant uptake among the 15 million AT&T unlimited customers.

“Broadcasters and sports network owners will hate AT&T Watch as it does not include their networks and will make the big, expensive legacy multichannel bundles appear that much more overpriced,” wrote Greenfield.

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