DirecTV is in a rather enviable position right about now, boasting the title as one of few paid TV service providers to gain an increase in new customers in the third quarter. While it is very likely that its popular NFL Sunday Ticket which features out-of-market football games played a significant role in the increase, there is no doubt that the partnership with AT&T was influential as well. DirecTV is currently engaged in partnerships with both AT&T and Verizon, agreements that allow the satellite TV provider to cross-market its services in areas where U-verse and Fios are not available. Of course there are obvious advantages to this agreement, which are evident in its third quarter report card. However, these are two partnerships that could end up spelling the demise of DirecTV as we know it.
Stabbed in the Back?
AT&T U-verse and Verizon are relatively new service offerings and still do not have the reach of DirecTV. These services are still only available in limited markets and despite the use of fiber-optic technology, their reliability and overall quality are still questionable in the eyes of some observers. With that said, AT&T and Verizon both have plenty of motivation to resell DirecTV packages and from the looks of it, neither has their partner’s best interests at heart.
Many suspect that the reason AT&T and Verizon are so willing to push DirecTV is solely for their own personal gain. In fact, both have been accused of trying to convert video subscribers that come by way of the partnership with DirecTV over to U-verse and Fios. Sounds a bit shady, but can you really blame them? After all, it is an easy and convenient switch for the customer. In the case of Fios, Verizon enjoys the added benefit of getting to keep 100% of the revenues generated from video services instead of sharing that money with DirecTV. Because the two had a partnership before Verizon’s bundled communications network actually came along, Verizon is having a much easier time stealing DirecTV subscribers due to the simple fact that they were part of the DirecTV client base Verizon already had its grips on.
A Possible Acquisition?
Considering its third quarter performance, it is difficult to say whether the partnerships with AT&T and Verizon are hurting or helping DirecTV. What is becoming clearer is a possible merger that could see the renown satellite TV provider swallowed up by one of the emerging telcos. For years now, rumors have been circulating that AT&T or Verizon would purchase DirecTV to seize control of its satellite operations. Such an acquisition would provide the phone companies with instant scalability that could potentially give them a considerable competitive edge over cable service providers. While rumors are merely that, even DirecTV Chairman John Malone would not rule out a possible acquisition by either AT&T or Verizon. In a recent interview, Malone stated that the DirecTV will likely have closer ties to both companies as they continue to develop phone and TV services.
The Future of DirecTV
We have been teased with an AT&T/Verizon acquisition of DirecTV for a while now, but anything is possible. Therefore, the cross-market partnerships could just be preparing AT&T and Verizon for what they will be doing in the future – selling DirecTV, only as a subsidiary product line.