Appetite for Destruction: DirecTV and Dish’s Hail Mary to Save Pay TV (Or Drive It Off a Cliff)

If there were an award for value destruction, AT&T would not only win the category every year, but the award would be shaped like the old Bell Telephone logo, and it would ring every time they misspent a billion dollars. And given their ability to sustain such a high level of performance by removing zeros from the end of their acquisition target’s valuations, it should probably have a mute switch on the back to prevent the winners from going crazy. But what does this have to do with streaming? Sit tight, folks, we’ll get there.

So Dish Network and DirecTV are now going to combine forces to create the largest MVPD in the United States, and this is somehow going to staunch the bleeding of subscribers they have both experienced because…..scale? This doesn’t feel like a great plan because when you’re losing more customers than you’re replacing, eventually you run out of, well, you know, customers. But maybe The Streaming Madman is missing something in this strategy, like with half of Amazon employees now threatening to quit to avoid going back to the office, they are all going to buy homes in quaint rural towns without cable, which will offset the subscriber losses. 

Even more lamentable is that both Dish Network and DirecTV were once innovators in the TV space, recognizing the benefits and value of a return path channel coming from their set-top-boxes. Granted, this came through plugging in an old-school twisted pair telephone cable (a solution that was heartily derided by cable techs who thought anything that wasn’t delivered on coaxial copper was inferior), but it needs to be said, these satcasters got the importance of return path upstream data years before cable did. And this allowed them to do some interesting breakthrough work in addressable and interactive advertising as much as 20 years ago. Necessity being the mother of invention, and invent they did.

Then along came AT&T, after freshly bungling the purchase of TCI from John Mallone and rolling out ATT Broadband (or should we call it “ATT Broadbandoned?)” as they then sold off these cable assets at a 37% discount per subscriber to a rising Comcast Corporation. Getting hungry yet again, they went on another buying bender and rolled up the venerable AppNexus and other adtech assets into a sprawling mix of platforms and tools in what would finally be renamed Xandr. And can we just take a moment here to wonder whether someone named Alexander would ever ask his buddies to call him “Xandr”? I mean, it’s clearly missing at least one vowel, if not two. 

This fine bit of kit was then later jettisoned into the loving arms of Microsoft, who apparently laid off some 2,000 folks from the advertising division in the past four months. And for those youngins reading TSM for the first time, let me bring you up to speed on the value destruction that the good folks in Redmond themselves have wrought in the digital marketing business with a single word: aQuantive. Bought for a staggering $6 Billion, WITH A B, Billion dollars they balanced their books five years later by writing off $6.2 Billion when they disgorged themselves of the business, including the OG digital agency Razorfish, and sold their ad server to, of all folks, Facebook.  And for the record, if you change your company name to anything that ends with a “V” sound, you’ve pretty much accepted that consumers will confuse you with an esoteric prescription medication to treat an especially aggressive STD. 

So, back to the phone lads trying to be TV players: Let’s not forget to discuss Uverse, which was actually pretty good and based on a pretty, pretty, good MediaRoom/MediaFirst/MediaBagel UI that was well ahead of its competition, which was retired in favor of…you guessed it, DirecTV. So, all of the ATT TV and DirecTV Now folks were pushed over to DirecTV Stream. See? I told you we would eventually get back to streaming.

On the Dish side of the ledger, there is the grandfather of streaming, the SlingTV platform, which in all fairness, does not suck. The fact that they took a bridging hardware technology, a SlingTV device, and managed to layer a well-managed TV service over it is worth acknowledging. But then the space cadets on the Dish TV side decided to blur the lines between Dish and Sling, and to this day, nobody other than a highly trained service representative can articulate a coherent reason to have both services. 

Right, so now that we’ve had a bit of history of how the AT&T elephant goes rampaging through the media village every few years, leaving a trail of sadness and unvested RSUs in its wake, let’s consider the future:

• Rural communities served by multicast satellite services will always exist but will use StarLink or other IP-based satellite services vs. traditional video services
  
• Streaming offerings from a combined DirecTV/Dish/SlingTV still require a broadband connection, so they are effectively competing with bundled pay tv channel offerings from the likes of YouTubeTV, HULU, and others.
  • They had  better leverage their TV sub count pronto to secure affiliate fees that are competitive or else they are going to bleed money like a head wound.
    
• In the short run, the combined Dish/DirecTV probably has a good advertising business proposition for brand advertisers: instantaneous massive reach when GRPs are becoming harder and harder to come by.
  
• Longer term, a DirectTV Stream and SlingTV combination that can challenge the likes of a XUMO/Flex product outside of its subscriber footprint will be necessary to remain a viable consumer choice in a fiercely competitive market.

So now AT&T is taking its cards off the table again, with a freshly minted $7B from the TPG private equity group (who clearly left their wallet in El Segundo) should console them as they contemplate where to best deploy these newly found funds. Let’s hope nobody has whispered the term “DOOH” to them lest we find ourselves staring at a blank digital billboard on the 405 as we inch our way to that studio/agency/client meeting where someone is invariably going to unironically use the word “premium” so many times that it loses any and all meaning. 

But that’s next week’s column…..

This Week’s Music: Flying Fish (Alexis Taylor & Pilooski Remix)

The views and opinions expressed by The Streaming Madman are entirely his own and do not necessarily reflect the views of The Streaming Wars or its affiliates.