AT&T, Univision Reach Partial Truce; Uncertainty Looms
Last week, a rift between AT&T Inc. T and Grupo Televisa, S.A.B.’s TV partly owned Univision, over carriage agreement terms, led to a blackout of the latter’s channels for AT&T’s U-Verse customers. Univision, a leading broadcaster of Spanish channels, had demanded compensation on par with the English broadcasters, accusing AT&T of discrimination against its Hispanic consumers. AT&T, on its part, responded by counter-accusing Univision of denying access to its channels and termed Univision’s price escalation as ‘outrageous’.
However, Univision has restored its main network for the time being, following AT&T’s request to allow the broadcast of the Univision-sponsored U.S presidential debate for its Spanish subscribers. Meanwhile, the temporary truce still excludes Univision’s other Spanish channels like UniMas and Galavision. Although a full fledged agreement covering all channels is still in the wait, the parties believe that a mutual agreement should be chalked out soon. Meanwhile, the partial access will bring some respite to U-Verse subscribers.
Post its acquisition of DirecTV last year, AT&T is now the largest pay-TV provider in the U.S. The wireless carrier is also due to launch an online streaming version of DirecTV later this year. Online streaming services are gaining popularity due to their flexibility and AT&T hopes to capture a significant portion of this market. However, it will have to battle competition from satellite TV peer DISH Network Corp.’s DISH SlingTV service and other established players like Netflix Inc. NFLX and Hulu.com. In order to retain its industry-leading position, it is important for AT&T to find a feasible solution to the broadcasting issue with Univision. Moreover, due to its large scale of operations, carriage negotiations may prove to be cumbersome going forward. Nevertheless, we believe that AT&T has enough expertise and negotiating ability to acquire content across its U-Verse, DirecTV and online video offerings.
AT&T currently has a Zacks Rank #3 (Hold).
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