Sunday, 23 October 2016 23:53

VIDEOS: AT&T to acquire Time Warner for US$85 billion in major media/comms shakeup Featured


Remember when AT&T was broken up in the US? Whether you do, or don’t, AT&T is on the verge of becoming the most powerful telco and media organisation in the world.

It’s the stuff of Telstra’s dreams: a telco servicing a population of more than 300 million, with enough clout and earnings to support a US$85 billion buyout of Time Warner – and that’s after spending US$49 billion to buy DirecTV.

Talk about relegating dumb pipes to the dustbin of history, AT&T wants to own the content, create it, serve it, charge for it and everything in between and beyond.

Telstra’s half share of Foxtel looks like a tiny molehill against AT&T’s Everest-size mountain in comparison.

AT&T itself naturally thinks it’s the deal of the century, and states in its media release that it will "lead the next wave of innovation in converging media and communications industry" with a "combination unlike any other – the world’s best premium content with the networks to deliver it to every screen, however customers want it".

Talking about how "the future of video is mobile and the future of mobile is video", AT&T notes that "Time Warner is a global leader in creating premium content, has the largest film/TV studio in world and an unrivalled library of entertainment".

Again, this makes a half ownership in Foxtel, a company that now makes its own content but has to buy the rest from content titans like Time Warner (owner of HBO and Game of Thrones, among all those other premium media assets), look like a small deal aimed at a small population compared to the combined might and power of AT&T and Time Warner.

Indeed, AT&T doesn’t just serve Americans. It also boasts of "unmatched direct-to-customer distribution across TV, mobile and broadband in the US, mobile in Mexico and TV in Latin America".

The company continues its list of benefits, noting the two companies combined are "positioned to create new customer choices – from content creation and distribution to a mobile-first experience that’s personal and social".

What’s the stated goal?

To "give customers unmatched choice, quality, value and experiences that will define the future of media and communications".

AT&T will also benefit from "customer insights across TV, mobile and broadband" which will "allow the new company to: offer more relevant and valuable addressable advertising; innovate with ad-supported content models; better inform content creation; and make OTT and TV Everywhere products smarter and more personalised".

What does AT&T chief executive Randall Stephenson think of the deal? Here’s his announcement – the article continues below:

While shareholders and regulators still need to approve the deal, AT&T and Time Warner say they "have entered into a definitive agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction valued at US$107.50 per share".

Naturally, the agreement has been approved unanimously by the boards of directors of both companies, or there wouldn’t be any such announcement.

The companies proudly boast "the deal combines Time Warner's vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T's extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution".

Stephenson said: “This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers.

“Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere.

“Our goal is to solve that. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.

“With great content, you can build truly differentiated video services, whether it’s traditional TV, OTT or mobile. Our TV, mobile and broadband distribution and direct customer relationships provide unique insights from which we can offer addressable advertising and better tailor content.

“It’s an integrated approach and we believe it’s the model that wins over time.

“Time Warner’s leadership, creative talent and content are second to none. Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services and you have something really special. It’s a great fit, and it creates immediate and long-term value for our shareholders,” added Stephenson.

Time Warner chairman and chief executive Jeff Bewkes said: “This is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multi-platform basis and to capitalise on the tremendous opportunities created by the growing demand for video content.

“That’s been one of our most important strategic priorities and we’re already making great progress – both in partnership with our distributors, and on our own by connecting directly with consumers.

“Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry.

“In fact, when we announce our 3Q earnings, we will report revenue and operating income growth at each of our divisions, as well as double-digit earnings growth.

Bewkes continued, “This is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape, and my senior management team and I are looking forward to working closely with Randall and our new colleagues as we begin to capture the tremendous opportunities this creates to make our content even more powerful, engaging and valuable for global audiences.”

There is a ton more detail on the deal at AT&T’s media release here.

The Washington Post thinks the deal could lead to a "seismic shift" in the industry.

Meanwhile, Recode points to an interesting speech made by Stephenson on why "black lives matter" as some background into the man who will be running both AT&T and Time Warner, once "shareholders and regulators" approve.

The video is embedded below.


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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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