Here is an expanded version of the WSJ article I just posted.
Note in particular the paragraph I have highlighted.
New Online TV Services Touted by Channel Owners Proving Slowing to Emerge
Feb. 16, 2016 3:50 p.m. ET
Who are the mysterious “new entrants” supposedly on the verge of entering the
Over the past few months, executives at major media companies including Time
Warner Inc., Walt Disney Co. , 21st Century Fox and Viacom Inc. have been
teasing the idea that several new entrants may be eagerly pursuing deals to
carry their channels on new online pay-TV services. During earnings calls last
week, Viacom and Disney executives mentioned such players as a potential area
of new growth to assuage investor fears about declining U.S. pay-TV subscribers.
But investors shouldn’t get too excited just yet.
New Web video services are being explored by companies including Apple,
Alphabet Inc. ’s YouTube, Amazon.com Inc., T-Mobile US, and AT&T, according to
people familiar with the companies’ plans, but none of them seem prepared to
launch imminently and talks aren’t advanced. All of these companies have held
talks with big media companies of late about licensing their channels or
programming to launch a TV offering delivered over the Internet, these people
say. Representatives for the companies declined to comment for this article.
Many of these players would like to deliver a subscription pay-TV package that
includes the most-viewed networks—a dozen or so popular channels, including
broadcasters and some cable networks—for a price that is between $24.99 and
$39.99, one media executive close to the negotiations said.
That price range has proven challenging. The Wall Street Journal has reported
on the interest from Apple, YouTube and Amazon before, but it’s been slow
going. That is because many big media companies still are loath to license just
one or two popular channels to a service. They typically want to sell all their
most valuable networks as a group to a new entrant. Those wholesale costs add
up and make it tough to hit the desired consumer price point if every big media
companies is going to be part of the service.
Apple has struggled to get TV channel owners to license the content it wants at
low enough prices to entice cord-cutters, media executives say. ESPN President
John Skipper told The Wall Street Journal last month that Disney remained in
conversations with Apple, but CBS Chief Executive Leslie Moonves said on CNN
earlier this month that “we had conversations awhile back, and we haven’t had
recent conversations with them.”
YouTube’s and Amazon’s interests are more “real” than a year ago, media
executives say. YouTube last year launched a $9.99-a-month subscription service
called Red, which offers ad-free videos and streaming music. The company has
sought streaming rights to TV series and movies from Hollywood studios to
bolster that offering. It’s unclear whether YouTube would want to offer a
streaming pay TV service through Red or separately.
Amazon has been taking steps to evolve its Prime video service to look more
like a virtual cable operator. In December, the company started offering live
and on-demand programming from channels such as Showtime and Starz for Prime
members for as much as $8.99 extra a month. But some media executives are
unsure how serious Amazon is about offering a bundle.
The wireless carriers are a new addition to the mix, though AT&T said when it
bought DirecTV that a move into “over-the-top” video was part of its grand
plan. AT&T has since been scant in offering details. But on a conference call
late last month, AT&T CEO Randall Stephenson said the company is “in the
process of getting some of the really critical content deals secured” and made
clear that a new video offering would come this spring.
T-Mobile recently began offering a feature that delivers video at a lower
quality in exchange for waiving related data fees to its customers, and CEO
John Legere has shown an interest in offering more video options. One media
executive said T-Mobile’s aspirations seem more akin to Verizon ’s go90 mobile
video service, which mostly showcases shorter-form video and offers add-on
subscriptions to packages like the National Basketball Association’s League
—Thomas Gryta contributed to this article.
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