Wells Fargo: AT&T In Good Position To Capitalize On Streaming
AT&T Inc. (NYSE:T) is well-positioned to take advantage of the changing ways Americans watch TV, as more and more people make the switch from cable and satellite to streamed programming, according to Wells Fargo.
“The shift in video delivery medium from traditional linear to over-the-top (OTT) services is in full swing and streaming is the way of the future,” Fritzsche said in a Monday note looking at how AT&T fits into that change. (See the analyst's track record here.)
The iconic phone company-turned telecom conglomerate has two important and unique advantages in cashing in on the massive shift in home entertainment habits, Fritzsche said: it owns the distribution network and it has a large, underappreciated amount of content.
“Importantly, T will be the only one of the OTT players which owns a nationwide TV and wireless platform and covers about 55 percent of the US households with broadband capability,” she said.
The company has OTT services through the DirecTV Now streaming product and WatchTV streaming app. At the end of this year, it plans to roll out a new subscription video on demand service, WarnerMedia Now.
Content Is King
In addition to already having a pipe into more than half of American homes, AT&T has more content than many people realize thanks to its acquisition of Time Warner.
The company has access to the Turner content library, which Fritzsche said is key to its ability to bundle content on its streaming services. AT&T also owns the Warner Bros. movie catalog of more than 2,600 titles going back to the early 20th century.
AT&T is well-positioned to "hold its own" in the OTT space, the analyst said.
“By layering on a deep content portfolio, with this control of much of the access pipe, it puts T in a unique position vs. its OTT competition in our opinion. That said — we still take a wait and see approach with the stock given this strategy will likely take time to move the needle in revenue.”
AT&T shares were down 0.75 percent at $30.36 at the time of publication Tuesday.
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