Is AT&T Watch A Cable Killer?

Although President Donald Trump is considered more pro-business than his predecessor, there's clearly one area where the new administration appears not as friendly to the corporate set: mergers. One clear example is AT&T's (NYSE:T) acquisition offer for Time Warner(NYSE:TWX), which is currently in the middle of an antitrust lawsuit with the Department of Justice.

This article originally appeared in the Motley Fool.

While it's anybody's guess who will win the lawsuit, it's possible that cord cutters might be the biggest winner from the trial. That's because AT&T's CEO Randall Stephenson announced a new streaming-based skinny television bundle, AT&T Watch, with reporting from The Wall Street Journal pegging the cost at $15 per month.

Scant details but the service appears interesting

Details about the service are still fluid, but there are reasons for cord-cutters to be encouraged. First is the price, the reported figure is among the lowest cost for streaming-based providers, particularly those providing access to live TV.

As a comparison, streaming-based Hulu (a joint venture of Disney, Fox, and Comcast's NBCUniversal) is offering a Hulu with live TV for $39.99 a month, although it boasts a large offering of approximately 65-70 channels. Dish Network's SlingTV offers a livestreaming package of 25 channels for $20 per month while AT&T's own DirecTV Now has a price tag of $35 per month.

Even more encouraging for cord-cutters are reports the service will not have any sports-based programming. Many cord-cutters eschew sports packages because programming costs -- often driven by the excessive cost of sporting leagues -- are the reason for expensive cable bundles. Disney's ESPN has been a cautionary tale for programming costs, as many subscribers are pushing back by asking cable companies for packages that exclude its host of networks and its cost of $9 per month.

An added benefit for wireless subscribers

The best feature of AT&T's new program is that the service will be free for AT&T customers with unlimited data plans. After years of competing on price, the wireless industry is quickly moving to valued-added features like free streaming video, both live and on-demand content, rather than a race to be the lowest-cost provider.

To date, disruption-focused T-Mobile has the highest-profile deal as streaming leader Netflix is provided to its subscriber base for free. Last year Verizon paid $1.5 billion for the right to offer streaming-based NFL games to its subs. Sprint partnered with Hulu to bring on-demand streaming to its customers. Currently AT&T offers DirecTV Now with HBO, both on-demand and live, for its unlimited subscribers.

Ironically, the Federal Communications Commission's decision to overturn net neutrality, which included a ban on zero metering, may lead to more creative add-ons to wireless service plans.

Is this a bonafide offer?

There's a huge elephant in the room: You must question AT&T's commitment to this new service as they benefit from large-package subscription television with both its Uverse TV services and the 2015 acquisition of DirecTV.

Stephenson's announcement is also noteworthy as he broke the news on the stand of the AT&T/Time Warner Cable merger case, apparently in response to the federal government's allegation that the acquisition would make it harder for the industry to offer cheaper, streaming-based options.

As such, it seems unlikely the service will be a cable killer. First, it's possible AT&T will abandon it in the event the federal government wins the lawsuit and disallows the merger. Even if AT&T triumphs, it's likely the service will be curtailed in the event it becomes too popular and steals business from AT&T's more-lucrative DirecTV division. That said, cord-cutters should look be hopeful about the new offering and the continued migration of products tailored to a post-cable viewership.

Jamal Carnette, CFA owns shares of AT&T. The Motley Fool owns shares of and recommends Netflix, Verizon Communications, and Walt Disney. The Motley Fool recommends Time Warner and T-Mobile US. The Motley Fool has a disclosure policy.