AT&T’s $85.4 billion purchase of Time Warner represents a new bet on synergy between companies that distribute information and entertainment to consumers and those that produce it.
CCTV America’s Jessica Stone reports.
AT&T's $85.4B deal for Time WarnerAT&T’s $85.4 billion purchase of Time Warner represents a new bet on synergy between companies that distribute information and entertainment to consumers and those that produce it. CCTV America's Jessica Stone reports.
The acquisition would combine a telecom giant that owns a leading cellphone business, DirecTV and an internet service with the company behind HBO, CNN, and some of the world’s most popular entertainment, including “Game of Thrones,” the “Harry Potter” franchise and professional basketball.
It’s the latest big media acquisition by a major cable or phone company — such as Comcast’s 2011 purchase of NBC Universal — and aimed at shoring up businesses upended by the internet.
Regulators would have to sign off on the deal, no certain thing. The prospect of another media giant on the horizon has already drawn fire on the campaign trail. Speaking in Gettysburg, Pennsylvania, GOP presidential nominee Donald Trump vowed to kill it if elected because it concentrates too much “power in the hands of too few.”
Sen. Al Franken, a Minnesota Democrat, said the deal “raises some immediate flags about consolidation in the media market” and said he would press for more information on how the deal will affect consumers.
Network-owning companies like AT&T are investing in media to find new revenue sources and ensure they don’t get relegated to being just “dumb pipes.” In addition to the Comcast-NBC Universal deal, Verizon bought AOL last year and has now proposed a deal for Yahoo to build a digital-ad business.
After its attempt to buy wireless competitor T-Mobile was scrapped in 2011 following opposition from regulators, AT&T doubled down on television by purchasing satellite-TV company DirecTV for $48.5 billion. AT&T is expected to offer a streaming TV package, DirecTV Now, by the end of the year, aimed at people who have dropped their cable subscriptions or never had one.
The venerable phone company has to contend with slowing growth in wireless services, given that most Americans already have smartphones. And it faces new competitors for that business from cable companies. Comcast plans to launch a cellphone service for its customers next year.
AT&T CEO Randall Stephenson, who will run the combined company, said on a conference call that the deal will allow AT&T to offer unique services, particularly on mobile, though he didn’t provide details. Jeff Bewkes, the Time Warner CEO who will stay with the company for an undefined transition period, added that more money will help fund production of additional programming and films.
Both men stressed that it will be easier to “innovate” when the companies are joined and don’t have to negotiate usage rights at arm’s length. (AT&T, of course, will still have to strike such deals with entertainment conglomerates it doesn’t own.) The combined company is also likely to lean more heavily on advertisements targeted at individuals based on their interests and personal details.
Buying Time Warner may be “a good defensive move” against Comcast as the cable giant continues stretching into new businesses, New Street Research analyst Jonathan Chaplin said in a Friday note. Comcast also bought movie studio DreamWorks Animation in August.
Story by The Associated Press.