AT&T’s foray into digital TV is running into a snag. Its new streaming service, called DirecTV Now, will reportedly launch without support from CBS, according to a report from Bloomberg. That means the service won’t at launch have access to shows like The Big Bang Theory, a sizable number of NFL games, or any of the other programming from the largest US network. DirecTV Now is said to have more than 100 channels and cost $35 a month. It represents one of the best values out there for the price, but the absence of CBS will likely undermine its initial success.
The dispute is also forging a wedge between two of TV’s largest players, and the results may have ripple effects far and wide beyond the industry. Many companies, from Apple to Sony to Google, are trying to find the perfect combination of price and channel selection to finally crack what’s keeping cable subscribers from cutting the cord. AT&T knows it will eventually need CBS to compete with these offerings and the rise of Netflix and Amazon, even if it has to pay a premium.
AT&T knows it will eventually need CBS, even if it has to pay a premium
Because CBS offers its own streaming service, CBS All Access, for $5.99 a month, it has been aggressive in demanding higher fees to license its content. Dish Network’s Sling TV does not have a deal with CBS, and Sony’s PlayStation Vue offers it only in select markets. According to Bloomberg, Hulu has yet to strike a deal with the broadcaster for its upcoming live TV bundle, while YouTube is paying higher-than-average fees to license CBS content for its upcoming pay-TV service.
So CBS is clearly leveraging access to its network as a way to test the waters of both its own streaming service and the future of skinny TV bundles. No single over-the-top offering has yet to offer a robust enough cable alternative to start converting cable subscribers, and it’s starting to look like DirecTV Now won’t either. We’ll know more about the service on November 28th, when AT&T will announce the service at an event in New York City. While we may get some answers on rumored features like cloud DVR and the ability to pause live TV, what we likely won’t hear about is access to CBS.