AT&T prices start creeping up after Time Warner merger
When the Justice Department unsuccessfully sued to block AT&T’s $85 billion merger with Time Warner, it argued combining the two companies would lead to higher prices for consumers.
The timing may be coincidental, but prices are going up for some AT&T customers. Since the merger was formally completed on June 14, AT&T has raised prices for its offerings, including a $5 price hike for each of its DirecTV Now streaming plans.
Starting July 26 for new customers, DirecTV’s new starting price is $40 a month for some 60 channels. The reason? To bring “the cost of this service in line with the market,” AT&T said.
The increase follows AT&T’s introduction, a week after its Time Warner merger closed, of an Unlimited & More “unlimited” wireless plan. At $70 a month, the plan costs $5 more than the basic unlimited plan that already was in place.
AT&T is offering more features on this new plan – it included a free bundle of the new WatchTV streaming service that AT&T announced on the same day. Wireless consumers could also stick with the older plan.
WatchTV is an example of a “skinny bundle,” with a roster of more than 30 live streaming channels – including some Time Warner properties such as CNN and TNT – and more than 15,000 TV shows and movies on demand. It costs $15 monthly as a standalone plan, but the truth is not every AT&T wireless customer will have any interest in the new streaming service.
With rival bundles available from the likes of Sony PlayStation Vue and Dish Networks’ Sling TV – and maybe if reports prove true, eventually from Apple – we may well be entering an intense competitive period not of price cuts but of “my bundle is richer than your bundle.”
Sling TV currently starts at $25 a month for 30 channels, and PlayStation Vue starts at $39.99 for around 50 channels. Both companies have just announced price increases.
You may not even notice one other price change on your wireless bill, but for AT&T it adds up to big savings that may help it offset the cost of the merger.
As spotted by BTIG analyst Walter Piecyk, AT&T increased its monthly “administrative fee” twice during its most recent quarter, with a June hike to $1.99 that is up from 76 cents in just three months. The cost was just 61 cents when it was introduced in 2013, Piecyk says.
The fee, which is tacked onto “postpaid” cellphone bills as well as tablets and smart watches, could lift AT&T’s wireless revenues by $970 million, which Piecyk writes in a note to investors, “comes in handy” for AT&T, “given that it just closed the Time Warner acquisition, which increased net debt by over $60 billion.”
Said AT&T: “This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers.”