AT&T, Discovery Enters Carriage Deal

Discovery Communications announced that it has inked a comprehensive carriage agreement with AT&T for its DirecTV and U-Verse platforms, together with the upcoming DirecTV Now, which is an over-the-top service.

The mentioned deal includes the linear networks of Discovery Communications, a strong on demand offering and TV Everywhere distribution. The content of Discovery will be available to the customers of U-Verse and DirecTV through the applications and websites of Discovery. The availability on DirecTV Now will start when the over-the-top service is rolled out during the fourth quarter of the current fiscal year.

According to Mr. Eric Phillips, the domestic distribution president of Discovery, “We are extremely pleased to announce a comprehensive long-term agreement with AT&T, that provides customers with continued access to Discovery’s portfolio of loved brands across AT&T’s linear and digital platforms.”

“We are pleased that we were able to get a win-win deal done with the largest distributor in the country. Our agreement greatly expands the AT&T platforms that will distribute our award-winning content, including future distribution on DirecTV Now for our portfolio of brands,” Mr. Philips further stated.

DirecTV Now is anticipated to serve as a game-changer for AT&T, as it can attract clients who have so far resisted pay TV with a streaming video option packed with live and on-demand content. The multinational telecommunication giant announced DirecTV Now during the month of March and has so far closed content deals with Cinemax and HBO.

The Chief Content Officer of AT&T Mr. Dan York stated,“Discovery Networks’ exceptional content adds tremendous value for AT&T’s DirecTV, DirecTV Now and U-verse customers who will now be able to enjoy it on virtually any screen.”

“By adding the Discovery networks to the growing DirecTV Now lineup, we are continuing to build a streaming service for the connected generation that we believe will be second-to-none in the industry,” the AT&T Chief Content Officer further added.

While the financial terms of the agreement were not revealed, the deal is believed to be favorable for both AT&T and Discovery Communications.

On Thursday, a blog post by MoffettNathanson LLC indicated that the agreement also eliminates one of the huge overhangs of the stock of Discovery, which is that it could take a blow from continued distributor consolidation and could be affected by rate resets and tiering problems that are faced by other content providers, such as Scripps Networks and Viacom.

The research firm wrote, “One of the reasons why Discovery’s not in the same camp as some of its peers is that Discovery’s prior deal with DirecTV occurred in 2012 over this time, Discovery’s ratings have meaningfully increased.”

“With both Comcast and AT&T DirecTV now under contract, Discovery has completed deals with the two biggest MVPDs which should set the pricing framework for the rest of its renewal cycle,” the blog post further added.

As of the time of writing, the stock of Discovery Communications is trading at $25.38, up by 1.24 percent or 0.31 points. Meanwhile, AT&T shares are changing hands at $41.19, down by 0.17 percent or 0.07 points.

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