AT&T has said very little about its plans for DirecTV, the satellite broadcaster it agreed to acquire in May for $48.5 billion. Now one plan has trickled out: it may scrap the brand name.
In an interview with the Wall Street Journal, AT&T CEO Randall Stephenson said the company has placed the broadcaster's name under review. "We haven't decided yet how we are going to brand it," he said, speaking at the World Economic Forum, in Davos. "We're testing the DirecTV brand and the AT&T brand, so we're doing a lot of thinking."
That thinking comes while the deal awaits regulatory approval. But Mr. Stephenson's candor suggests the acquisition may be finalized soon.
During the interview, the wireless executive was also flippant about the position the company will take on over the top broadcasting:
Mr. Stephenson said it was "inevitable" that the traditional "bundle" of cable television channels will crumble as more content travels "over the top" to customers via the Internet.
He said he wanted AT&T to be part of that transition and was fully prepared for erosion of the DirecTV customer base over time.
"We will go hard at 'over the top' and will invest in the tech platform and content," he said, adding that AT&T has weathered such transitions repeatedly during his time at the company. "We build this into our models. I've gone through these transitions more than I can count. They all look the same. The new stuff grows really fast, and margins get compressed. Once you have 30% penetration, you can get your cost structures in line and then ride the growth curve."
AT&T has a history of eliminating brand names. In 2006, it canned the popular Cingular Wireless brand, a move judged unwise by marketing observers at the time.
AT&T is the nation's second largest advertiser, spending $3.3 billion in 2013, according to the Ad Age DataCenter. The company is currently searching for a replacement for its VP-advertising, Esther Lee. DirecTV spent $553.5 million in 2013.