AT&T’s trial to acquire Time Warner ended last month, with Judge Leon stating that AT&T could acquire Time Warner without any conditions attached. That was the last thing that the Justice Department wanted. In fact, the Justice Department argued that AT&T could raise prices after acquiring Time Warner. Though AT&T promised it would actually lower them. However, now just a few weeks after that trial, AT&T has announced that it will be raising prices for DIRECTV NOW by $5 per month on all of its plans. Essentially doing the opposite of what it said it would do during the trial.
AT&T stated that “to continue delivering the best possible streaming experience for both new and existing customers, we’re bringing the cost of this service in line with the market – which starts at a $40 price point.” That is not really true, considering Sling TV is priced at $25 and Fubo TV at $35 as a starting price, but DIRECTV NOW does offer far more channels for that price, so it’s not really apples to apples here. AT&T isn’t the only one to increase pricing on its streaming TV service, however. Sling TV, PlayStation VUE and YouTube TV have all raised their prices by $5 per month. However, with AT&T owning a fair bit of content now, thanks to acquiring Time Warner, it could likely drop its prices and appear to be a better option compared to its competitors. But it is following the market here, and analysts believe that this increase could be to help cover the costs of the Time Warner merger.
The Justice Department sued AT&T to block the acquisition of Time Warner earlier this year for this very reason. To keep AT&T from gouging customers on its content. And that’s exactly what AT&T is doing now. The Justice Department had argued that because AT&T would own the content, the infrastructure that sends that content to your device and the devices (smartphones, tablets, etc) that AT&T could increase prices and charge competitors more for its content. AT&T said it wouldn’t, because that would cost them more money. But it appears that it is going to raise prices, at least on its streaming TV service. It’ll be interesting to see if it increases its licensing fees to other cable and satellite TV services to host its content.