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AT&T sees 20 pct cut in U-verse content costs after DirecTV merger
June 3, 2014 / 10:13 PM / 3 years ago

AT&T sees 20 pct cut in U-verse content costs after DirecTV merger

NEW YORK, June 3 (Reuters) - AT&T said on Tuesday it expects to cut programming costs for its U-verse television product by more than 20 percent with its $48.5 billion purchase of satellite television provider DirecTV - savings that will be the biggest portion of the deal’s cost benefits.

The acquisition will also enable AT&T, the country’s No. 2 wireless carrier, to offer a pay TV and wireless bundle to an additional 45 million U.S. customers, the company said in a regulatory filing with the Securities and Exchange Commission.

The filing adds details to a bid that has boggled some analysts who see little benefit to the mobile carrier.

Pay TV operators have complained about rising programming costs, which take up a major chunk of operators’ video revenue and hurt their margins.

AT&T expects to save roughly $650 million annually in the two years after the deal closes, and $1.6 billion annually in year three and after. The savings will give AT&T more leverage to negotiate content costs, the company said last month. (Reporting By Marina Lopes; Additional reporting by Liana Baker; Editing by Steve Orlofsky)

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