The ongoing legal battle between AT&T and the Department of Justice over whether AT&T can acquire Time Warner is giving us a unique insight into the minds of cable companies. Most notably, what we’ve all long suspected — that cable companies are slow to embrace streaming because they don’t want to lose their cash cow — is being repeatedly confirmed.
The LA Times reports that during last week’s testimony, the DoJ brought up an email sent by Daniel York, current CCO of the AT&T Entertainment Group and a former top exec at DirecTV. In an email to his boss, York said “content providers generally are shortsighted whores” for dealing with streaming services, particularly Dish Network’s Sling TV.
The email will likely come as a blow to AT&T’s whole argument, which is that it won’t abuse its ownership of Time Warner’s content to unfairly advantage its own distribution services. AT&T has repeatedly said that it would just be common sense for it to sell Time Warner programming to as many services as possible, but as the email shows, York didn’t think a few years ago that selling programming to as many places as possible was the right financial move.
The current problem facing cable companies is that subscribers are ditching cable for streaming services, and those streaming services make far less money than cable bundles. Most of the streaming services cost around $35-40, which industry execs have said is right around the break-even point for those services. The average cable bundle, on the other hand, runs $105, and most of that is profit. Therefore, the legacy cable companies have a huge incentive to keep milking their cable cash cow, and their best weapon to do that is exclusive programming that you can’t get on streaming services.