Universal Aligns With U-verse, NBC Is First To Strike Deal With AT&T

by David Goetzl, Nov 28, 2006, 7:45 AM

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AT&T, which has rolled out its telco TV offering in only one market so far but has promised 14 more by the end of the year, has struck a deal that could signal where it plans to launch next. The sprawling agreement with NBC Universal gives the telcom giant the rights to offer all of NBC's owned-and-operated local stations, perhaps setting the stage for AT&T U-verse to enter DMAs such as New York and Los Angeles.

While hurdles remain for AT&T to enter those and other top markets--including presumably deals with CBS and Disney--the deal provides some evidence that its planned ramp-up may include other top-10 markets.

The company has said it will launch in number-10 Houston--which does not have an NBC O&O--soon, but has not identified the other markets on tap for this year.

NBC O&Os are in seven of the top-10 markets with Dallas, San Francisco and Washington joining the top-4 of New York, Los Angeles, Chicago and Philadelphia.

The Dallas market may be a ripe target, since AT&T would then offer the service there along with Houston and San Antonio, allowing it some potential marketing synergies across Texas as it builds awareness. San Antonio, where AT&T is based, is the only market with U-verse so far, and has about 3,000 customers.

In markets such as New York and Los Angeles, AT&T apparently would still need to make deals with CBS and Disney to offer the CBS and ABC owned-and-operated stations. CBS has a deal allowing Verizon to offer its O&Os on the telco's FiOS service, a competitor to AT&T U-verse; Verizon has made a major push into the New York market.

So-called telco TV competes with cable and satellite operators to offer consumers a third option for receiving cable television channels. It offers the potential to compete via a "quadruple play" one-stop-shop of TV, Internet, phone and wireless service. But in San Antonio so far, only about 10% of customers who could go with the TV option have signed up.

In addition to the owned-and-operated stations, the AT&T-NBCU deal gives the telco the rights to offer a slew of cable channels including USA, SciFi, and Bravo as well as Universal HD.

AT&T has said one of the reasons it has rolled out U-verse at a considerably slower pace than FiOS is that it wants to ensure that the service is HD-capable when it enters a market.

AT&T has promised to be in 15 markets by Jan. 1.

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