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  • AT&T-DirecTV deal draws mixed reactions from media analysts, shareholders

    AT&T-DirecTV deal draws mixed reactions from media analysts, shareholders

    NEW DELHI: The recent announcement about American telecom carrier AT&T making a $48.5 billion bid for DirecTV has led to heated debate both in the media in the United States as well as among shareholders, stock watchers and industry stakeholders.

     

    Some analysts are questioning if the deal is so fruitful then why companies like Apple, Verizon and Google never considered purchasing DirecTV.

     

    According to various reports in the media in the US, DirecTV shareholders are reportedly happy with the price and shareholder rights attorneys at Robbins Arroyo are investigating the proposed acquisition.

     

    DirecTV shareholders will receive $28.50 in cash and $66.50 in shares of AT&T stock for each share of common stock, for a total consideration of $95.

     

    Robbins Arroyo’s investigation focuses on whether the board of directors at DirecTV is undertaking a fair process to obtain maximum value and adequately compensate DirecTV shareholders, who were expecting more.

     

    The $95 merger consideration is significantly below the target price set by at least four analysts, including a target price of $100 set by analysts at Macquarie Group and Atlantic Equities.  The company’s comparable adjusted earnings per share beat analyst estimates in three out of its last four quarters, said Robbins Arroyo.

     

    DirecTV shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.

     

    AT&T has also been under attack from Fitch Ratings that has placed the ‘A’ Issuer Default Ratings (IDRs) and outstanding debt of AT&T and its subsidiaries on Rating Watch Negative. The company’s ‘F1’ short-term IDR and commercial paper rating has also been placed on Rating Watch Negative.

     

    Meanwhile, Fitch has placed the ‘BBB-’ IDR and outstanding debt ratings assigned to DirecTV Holdings on Rating Watch Positive. Approximately $20.8 billion of debt outstanding at DirecTV as of 31 March 2014 is affected by Fitch’s action.

     

    Fitch said AT&T’s acquisition of DirecTV will improve its financial flexibility owing to DirecTV’s strong free cash flows and the significant equity component in the transaction financing. The transaction also strengthens the company’s position in the video landscape, offering the potential to capitalise on trends for mobile video and over-the-top (OTT) video delivery. The acquisition also diversifies AT&T’s revenue stream.

     

    DirecTV’s video assets are complementary to AT&T’s operations, but the longer term strategic benefits are less clear and depend on the post-merger company’s ability to capitalise on emerging trends in the industry, Fitch said.

     

    But AT&T’s planned acquisition of DirecTV offers benefits in the form of a nationwide footprint for AT&T as a video over the top (OTT) and pay TV operator and ties in with the company’s already strong IPTV, broadband and wireless businesses, said Strategy Analytics.

     

    “The industry is at a turning point where fixed operators are under tremendous pressure from increasing costs but DirecTV is known for having a higher-end customer base, and the ARPU for the company reflects the premium service,” said Strategy Analytics service provider strategies director Jason Blackwell.

     

    Multi-play bundling is an important strategy for AT&T, indicated by the high number of its customers who subscribe to three and four services. Targeting high ARPU, premium customers with DirecTV plays well into AT&T’s strategy. Through this deal, AT&T is buying scale in Pay TV, premium customers for greater multi-play service adoption, and a nationwide footprint for quad-play services.

     

    AT&T will probably be able to integrate DirecTV spectrum and delivery mechanisms as well as OTT Video services even more rapidly if the new FCC Net Neutrality rules are adopted. “It looks as if AT&T has placed a major bet on this happening. These FCC rules could dramatically simplify the delivery of multi-device multi-service ‘multiplay’ bundles across fixed and wireless; and even stimulate innovation in fixed telco services based on mobile features,” said Sue Rudd, director, Service Provider Analysis for Wireless Networks and Platforms.

     

    America Movil has no plans to buy any significant portion of AT&T’s stake, according to a report from Bloomberg. A public sale of AT&T’s 8 percent holding is seen as the most likely scenario. Such a secondary offering could let America Movil owner Carlos Slim and his family add to their personal stakes if they choose.

     

    Fortune reported that AT&T’s $49 billion agreement to buy DirecTV is a promise to build and enhance high-speed broadband for 15 million U.S. customers, many of whom live in rural areas that can be difficult to reach at a viable cost.

     

    The $48.5 billion deal could fall apart if the satellite-TV company is unable to renew its NFL Sunday Ticket service, a premium package offering access to all out-of-market games for $39 per month.

     

    Football could play a decisive role in the megamerger. The breakup provisions stipulate that AT&T would be able to litigate and potentially collect damages if DirecTV fails to use “it’s reasonable best efforts to obtain such a renewal” of NFL Sunday Ticket, according to a filing with the Securities and Exchange Commission, said a Business Week report.

     

    Meanwhile, Infonetics Research has reduced its 2017 pay-TV revenue forecast by 35 per cent globally, from $401 billion to just under $260 billion. It said the overall video services ARPU and revenue growth will be constrained. 

     

    “This is because of the result of increasing competition from OTT (over-the-top) players and the service providers themselves using broadband video as a lower-priced offering,” said Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics Research.

  • Eric Cevis Appointed President of Global Wholesale at Verizon

    Eric Cevis Appointed President of Global Wholesale at Verizon

    MUMBAI: Verizon Enterprise Solutions president John Stratton has appointed Eric Cevis to lead the unit’s global wholesale division. Cevis most recently led the Verizon’s global wholesale sales organization for the Americas.

    Verizon’s global wholesale team provides a comprehensive portfolio of voice, data, Internet, Ethernet, Global IP, FiOS and advanced cloud and security solutions, as well as professional service engagements. In his new role as president of global wholesale, Cevis will lead an international cross-functional team including sales, marketing and operational support.  The global wholesale organization supports customers including wireless service providers, IXCs, CLECs, ISPs, ILEC, MSO/cable and other telecommunications companies, as well as aggregators, resellers and content providers.

    “Eric has a proven track record of driving innovation and delivering results for our wholesale customers,” Stratton said. “His broad expertise, leadership and customer focus are essential as Verizon strengthens itself as a globally connected company.”

    Cevis has been with Verizon and its predecessor companies since joining Bell Atlantic in 1986, as a staff supervisor for government systems. He has held a variety of roles, including delivering bundled broadband communications services to entire communities; developing new business channels for the retail markets team; and leading sales efforts in emerging markets.

    He is a member, and has served as the national program chair, of the National Eagle Leadership Institute (NELI); serves on the advisory boards of the Consortium of Information and Telecommunications Executives (CITE) and the National Association of Black Telecommunications Professionals; and sits on the board of the National Multi Housing Council.  He is the founding president of the Mu Mu Chapter of Kappa Alpha Psi Fraternity, Inc., on the campus of George Mason University. He is also the executive champion for Disabilities Issues Awareness Leaders (DIAL), a Verizon employee resource group.

    Cevis holds a B.S. degree in marketing management from George Mason University and has done post-graduate work at Wharton.

    Verizon Enterprise Solutions is a leading provider of advanced IT and communications services to enterprise and governments around the world. Visit Verizon Enterprise Solutions for more information.

  • Verizon Identifies Key Enterprise-Technology Trends for 2014

    Verizon Identifies Key Enterprise-Technology Trends for 2014

    MUMBAI: Enterprise users will gain unprecedented control over their technology environment in 2014, according to Verizon Enterprise Solutions’ list of top enterprise technology trends for 2014. The new year will see a sharp focus on how enterprises and governments use technology to enhance the customer’s experience and enable innovation.
    “We are experiencing the democratization of enterprise technology,” said David Small, Verizon Enterprise Solutions’ chief platform officer. “Mirroring what has happened in the consumer technology space, enterprise technology users look for services to be delivered on demand, to a time and place of their choosing, and in the way that they want. In 2014, enterprise success will be measured by how well organizations are able to use technology to meet user expectations and harness individual innovation.”
     

    Here are the key trends Verizon believes will drive change for enterprises and government in 2014:

    1. The Customer of One Comes of Age

    The ability to tailor a customer’s experience to best meet personalized, individual needs will increasingly be a brand differentiator. In 2014, enterprises will refocus on customer touch points, recognizing that integrated omnichannel connections – across online, mobile, broadcast and in-store –can make customers feel valued at every step of the purchase and experience lifecycle. These integrated systems will be the key to opening up new routes to markets by enabling businesses to engage directly with the individual on demand, and build trusted connections to simplify transactions. Insight provided by big data analytics will create new, individualized marketing opportunities that will transform and focus the customer engagement model.

    2. M2M ‘as a Service’ Simplifies Path to the Connected World

    Ubiquitous4G LTE wireless service and the availability of machine-to-machine (M2M) solutions “as a service” – on demand, over the Internet and ready to use –coupled with strong security will overcome the issues that have previously prevented many organizations from fully embracing M2M. By leveraging third-party expertise, organizations will be able to quickly transform the conversations of intelligent endpoints into unprecedented insights – and unprecedented business opportunities. As M2M adoption accelerates, manufacturers, dealers and business partners will be able to realize the full potential of new revenue streams and increased operational efficiencies, while better meeting the needs of their customers.

     

    3. The Shortage of Security Expertise Forces Changes to Cyber security Management

    Continued targeted attacks and high-profile security breaches impel corporate boards of directors to demand substantial increases in security investments in 2014 – and rethinking of traditional approaches to cyber security management. As enterprises increasingly adopt mobility, big data, cloud and broadcast solutions, the complexity of effective cyber security programs far exceeds both the availability of human capital around the world and the capability of any one enterprise to execute alone. Enterprises will develop and execute hybrid cyber security-management models that combine an agile staff of in-house security-minded business experts with trusted managed security services across a broad range of capabilities such as identity management, security analytics and cyber intelligence, and governance, risk and compliance.

    4. IT Decentralizes

    Organizations embracing the new information technology world of cloud, mobility and M2M will see IT increasingly decentralized. IT will be core to every business function. As a result, IT will work more closely with individual business units and focus on developing tools for seamless process enablement that empowers employees and customers. The C-suite (e.g. CFO, CMO, COO), lines of business and staff functions will increasingly take the lead role in engaging and deploying in the cloud, because of the immediate deployment speed, flexibility, control and cost value they see in cloud, as well as advantages in big data analysis. IT will be integrated into financial performance planning, and the lines between the IT department and finance will continue to blur as technology becomes the valued enabler, rather than the end game.
    5. Providers Add Gravity to the Cloud

    In a world where mobile is the norm, and rich media content is a given, the cloud will come into its own as the only location where growing data volumes can be stored, accessed and analyzed on demand. In 2014, adding software and services to the cloud will be a key focus for cloud providers seeking to attract customers –adding gravity and encouraging user stickiness. 

    Integrated cloud offerings will increasingly enable mashups of fixed and mobile networks; systems, ideas and solutions; people and things; and intelligence and information. Providing systems and tools to transform these data into insights in the cloud and on demand will transform the customer experience.

    Small concluded: “Verizon Enterprise Solutions brings together an unparalleled set of assets with the objective of driving open a connected world of opportunity for our clients. Whatever their industry or sector, in 2014 our clients will look to invest and innovate so they can more rapidly and securely deliver their products and services where, when, and how their users want them. Our focus is on offering powerful answers to business challenges by harnessing the power of our advanced technology platforms to deliver industry-specific solutions that unlock productivity and value for our clients, their customers and society.”

  • Verizon reinvents the enterprise cloud

    Verizon reinvents the enterprise cloud

    MUMBAI: Verizon has today announced Verizon Cloud – its new cloud Infrastructure as a Service (IaaS) platform and cloud-based object storage service. With this service, Verizon is fundamentally changing how public clouds are built. Large enterprises, mid-size companies and small development shops will get the agility and economic benefit of a generic public cloud along with the reliability and scale of an enterprise-level service with unprecedented control of performance. The public beta for Verizon Cloud will launch in the fourth quarter of this year.

     

    “Verizon created the enterprise cloud, now we’re recreating it,” said Verizon Enterprise Solutions president John Stratton. “This is the revolution in cloud services that enterprises have been calling for.  We took feedback from our enterprise clients across the globe and built a new cloud platform from the bottom up to deliver the attributes they require.” Verizon Cloud has two main components: Verizon Cloud Compute and Verizon Cloud Storage. Verizon Cloud Compute is the IaaS platform. Verizon Cloud Storage is an object-based storage service.

     

    Verizon Cloud Compute is built for speed and performance. Virtual machines (software-based computers and servers) can be created and deployed in just seconds, and users build and pay for what they need. With Verizon Cloud Compute, users can determine and set virtual machine and network performance, providing predictable performance for mission critical applications, even during peak times. Additionally, users can configure storage performance and attach storage to multiple virtual machines. Previously, services had pre-set configurations for size (e.g. small, medium, large) and performance, with little flexibility regarding virtual machine and network performance and storage configuration. No other cloud offering provides this level of control.  

     

    In addition, while Verizon built the solution for enterprises, it also meets the needs of small and medium businesses, individual IT departments and software developers. “This is a breakthrough approach to how cloud computing is done,” said The Weather Company chief information officer Bryson Koehler.

     

    “Weather is the most dynamic dataset in the world, and we also use big data to help consumers better plan their day and help businesses make intelligent decisions as it relates to weather. As a big data leader, a major part of The Weather Company’s go-forward strategy is based on the cloud, and we are linking a large part of our technical future to these services from Verizon.”
    Rob Walters, chief technology officer at Engine Yard, a Platform as a Service that lets developers plan, build, deploy and manage applications in the cloud, said: “The new Verizon Cloud will give us ease of deployment and flexibility with full enterprise capabilities, saving us time and money. We’ve had a long and successful relationship with Verizon. We’ve deployed some of our most demanding enterprise-grade applications on Verizon cloud infrastructure to deliver the high scalability and reliability required for business-critical apps running on Engine Yard.”

  • ESPN re-ups with Twitter Amplify for college football

    ESPN re-ups with Twitter Amplify for college football

    MUMBAI: Television networks and publishers are really getting on board with Twitter Amplify.

    In the second development of its kind during the last few days, ESPN will quickly deliver college football highlights from numerous games this season – which kicks off this weekend—through its Twitter handle and via the social-TV Amplify platform. ESPN will run the same highlights across its Web and mobile app properties.
    In all cases, an eight-second pre-roll ad for Verizon Wireless will appear as part of a larger “#DidYouSeeThat” campaign for the telecom that will include spots on ESPN channels during the full college season.

    It’s the second year in which ESPN and Twitter have partnered for the Amplify program. The deal is probably a thing of beauty – the ability to focus on single games via the living room flat-screen TV while getting snippets galore of other contests on your laptop, tablet or smartphone.

    Twitter Amplify head Glenn Brown said, “Programs like this are a win-win-win for everyone involved. Brands get new opportunities to reach consumers, networks can distribute their content across multiple platforms and generate new revenues, and users get amazing content from the best plays happening in college football.”

    Earlier this week, Twitter debuted a similar agreement with the United States Tennis Association for the US Open, where the tourney is relaying top video highlights via the social site.

    In that example, Heineken has bought the exclusive sponsorship for the event, which runs through 8 September.

  • Indians among top operators providing broadband in 2012

    Indians among top operators providing broadband in 2012

    NEW DELHI: China, India and the US accounted for 50 or nearly half of the 106 top operators, with 27 entities based in China and 12 in India.

    Media and communications analysis specialist SNL Kagan has compiled a database of 106 major operators serving no fewer than two million video subscribers or one million fixed-line broadband subscribers at year-end 2012 to facilitate a global comparison of the world‘s largest video and broadband providers.

    The United States came third with 11 operators, followed by France, Germany, South Korea, Brazil and Mexico, each with five.

    American cable giant Comcast Corp remained the world‘s largest pay TV provider as of year-end 2012 with 22 million video subscribers, while Chinese telco incumbent China Telecom was the top fixed broadband provider, reaching 90.1 million high-speed internet customers.

    On a regional level, China‘s ongoing cable consolidation and India‘s continued DTH surge have produced many top pay-TV operators in the Asia Pacific region with gigantic subscriber bases.

    At end-2012, the top 10 Asia Pacific operators each served more than 10 million video subscribers and still are on track for further growth.

    Strong DTH uptake has also taken place in Latin America, where top providers SKY Brasil, Sky Mexico and America Movil‘s Claro made the most aggressive subscriber net additions in 2012 in the region. In the advanced territories of North America and Western Europe, telecom providers are outpacing incumbent cable operators in terms of subscriber growth, with IPTV services from AT&T Inc, Verizon Communications Inc, France Telecom Group and Deutsche Telekom AG registering the most net additions, while cable giants such as Comcast Corp, Rogers Cable Inc, Kabel Deutschland GmbH and Numericable SAS continued to suffer subscriber loss.

  • Comcast is the second largest advertiser in the US

    MUMBAI: Comcast is now the second-largest advertiser in the US behind Procter and Gamble.

    Kantar Media said that Comcast spent $1.7 billion in ads on consumers last year. But its direct-mail fliers aren‘t part of the estimate. Procter and Gamble is comfortably at number one having spent $2.8 billion.

    In third place was General Motors with $1.6 billion. Comcast increased its ad spend for NBC Universal and the Xfinity cable services as it competes fiercely with Verizon.

    In 2011 Comcast was the fifth largest ad spender in the US.

  • IPTV Q4 growth decelerates in the US: Study

    IPTV Q4 growth decelerates in the US: Study

    MUMBAI: The growth of the US Internet Protocol Television (IPTV) market continued to decelerate in the fourth quarter of 2012, due to the impact of Hurricane Sandy and the slowing expansion of Verizon‘s FiOS service.

    The two major US IPTV players, Verizon and AT&T, reported a combined gain of 326,000 video subscribers in the fourth quarter, down by 19 per cent from the 402,000 acquired during the same period in 2011, according to the IHS Screen Digest.

    This marked the second consecutive year of slowing subscriber growth in the fourth quarter, with the total for the last three months of 2011 down 7 percent from 430,000 in 2010, as presented in the figure below.

    For the year 2012, net subscriber adds for the two US IPTV services amounted to 1.3 million, down 14 per cent from 1.5 million in 2011.

    Through 2017, both the major US IPTV players will continue to see their subscriber gains moderate as the market becomes more mature. By 2017, IHS Screen Digest expects that IPTV in the United States will account for 13.4 million pay-TV households, or 10.8 per cent of all pay-TV subscribers.

    IHS senior analyst for television research Erik Brannon said, “Verizon‘s Fios accounted for the majority of the slowdown, as the fiber-to-the-home (FTTH) service added only 134,000 subscribers in the fourth quarter of 2012, down from the 194,000 gained during same period in 2011.

    “The disruption caused by hurricane Sandy may have slowed FiOS‘s progress. However, the major reason for the deceleration is that FiOS is largely finished expanding its footprint into new geographic areas of the United States. FiOS‘s penetration is significantly higher than that of U-verse, causing long-term growth to slow for Verizon‘s IPTV service.”

    Fios Slowing-but Still Growing: Fiox in 2012 increased its video subscriber base by 553,000 to reach 4.7 million, up 13.3 percent from 4.2 million in 2011. This represents a 21 percent reduction from the 701,000 increase in 2011.

    Fios‘ video penetration now stands at 33.3 percent, compared to 31.5 per cent at the end of 2011. Still, the largest US IPTV provider grew its video subscriber base by 13.3 per cent this past year.

    The Expanding U-verse: AT&T continues to maintain its growth in its U-verse video services, as 192,000 subscribers joined in the fourth quarter of 2012, only 8,000 less than during the same period in 2011.

    U-verse video subscribers grew 19.6 percent for the year and now stand at 4.53 million, closing in on FiOS‘s total video subscribers. With a much broader rollout of U-verse, the fiber-to-the-node service passes 72 percent more eligible video homes than FiOS. Given a significantly larger reach and low video penetration of just 18.7 percent, AT&T is also able to maintain steady growth in gains for its IPTV services.

    All told, U-verse added 745,000 subscribers in 2012, down just 7.3 percent from 2011‘s net gain of 804,000 subscribers.

    IPTV for Everybody: IPTV growth continues in the US, although at a reduced pace. Plenty of room for expansion remains as Fios focusses on penetration levels and U-verse stresses marketing to its lightly penetrated footprint.

  • TV holds lion’s share of ad spends in US: Nielsen

    MUMBAI: The ferocious growth of the digital medium notwithstanding, television continues to hold the lion’s share of ad dollars and consumers media time in the US, according to Nielsen.

    Television ad spend was up 4.5 per cent in 2011 even as total ad spends increased by a mere two per cent, according to the third and final part of Nielsen’s Advertising & Audiences Report.

    The total ad spend for TV reached $72 billion, more than all other ad platforms combined. The print media commanded the second biggest share of ad spends with magazines and newspapers collectively cornering $28 billion. Internet and radio garnered $6 and $7 billion respectively.

    The report took an in-depth look at media consumption by platform and found that American advertisers and consumers have a huge appetite for television, as TV holds the lion’s share of ad dollars and consumers’ media time.

    Spending on cable TV has increased steadily over the last few years, up 42 per cent from 2007, the report added.

    Spanish-language cable and network TV saw double-digit growth in ad spend, up 24 per cent and 16 per cent respectively, from 2010.

    Automotive was the largest category for advertising spend across all media, with $10.2 billion spent by automotive brands while AT&T and Verizon were the top TV spenders during 2011 for brands AT&T Wireless Web Access ($1.1 billion) and Verizon Wireless Web Access ($702.2 million).

  • Ad spends on cable grow at cost of networks: Kantar Media

    Ad spends on cable grow at cost of networks: Kantar Media

    MUMBAI: Broadcast networks in the US continued to stumble despite humble gains in advertising spends on television as a whole.


    During the first half of 2011, advertising sales at the broadcast networks reduced by 7.6 per cent to $10.8 billion.
    According to a report issued by Kantar Media, several factors contributed to this reduction.


    The broadcast of BCS bowl games on ESPN instead of Fox generated a major one-time shift in spending to cable. The shift of March Madness from CBS to Turner Sports benefited cables further at the cost of networks.



    To make things worse, ad spends on prescription drug, financial services, and consumer package goods categories were shifted to cables as well. From 1 June till 30 June, the budget allocations on cable networks were further augmented by 11.8 per cent, reaching a total of $10.8 billion.


    Television on the whole rose by a meagre 1.8 per cent, as the total amount of monies spent in the medium touched $32.9 billion. TV accounted for approximately half (46 per cent) of the total advertising expenditures.


    Overall, ad growth lost pace in the second quarter, as spending increased 2.8 per cent versus the year-ago period. In Q2 2010, the dollars increased 5.1 per cent.
    Kantar Media North America executive vice president of research Jon Swallen said, “Advertising grew at a slower rate in the second quarter, contributing to speculation about the durability of an advertising recovery that is into its second year. Key ad spend indicators are painting a mixed picture.


    On the one hand, a majority of media types actually improved their performance from Q1 to Q2. On the other, spending growth for the Top 100 advertisers stalled in Q2, and the ad market became more dependent on the comparatively smaller budgets of mid-sized advertisers.”



    In the first half, top 10 TV advertisers reduced their spending by 1.7 per cent to $5.17 billion. Six out of the major spenders slashed their ad spends to some extent.


    AT&T remained the largest TV spender, buying $789.4 million in air time, down 3.7 per cent as compared to the same period a year-ago.


    Other significant advertisers on television: Procter & Gamble ($762.7 million, down 11.3 per cent); General Motors ($570.3 million, down 7.7 per cent); Verizon ($478.1 million, down 22 per cent); Johnson & Johnson ($431.7 million, down 15.2 per cent) Ford Motor Co. (up 0.8 per cent to $410.8 million); Pfizer ($397.4 million, down 8.2 per cent) and McDonald‘s (up 7.3 per cent to $375.1 million).