AT&T takeover of Time Warner will determine the future of media

24 Oct 2016

The acquisition of Time Warner by AT&T represents the telecoms industry fightback to reclaim consumer eyeballs. Image: emin kuliyev/Shutterstock

The media landscape of the future, combining comms and media, is being determined in the form of an $85.4bn cash and stock acquisition of Time Warner by AT&T.

Time Warner had previously rejected an $80bn takeover bid by Rupert Murdoch-controlled 21st Century Fox.

Then Apple came a-knocking and held a few preliminary meetings that led nowhere (but the potential implications are manifold).

‘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’

Future Human

And now it has emerged that Time Warner – owner of major franchises like HBO, CNN and DC Comics – will become the central hub of a strategy by the largest player in US telecoms, AT&T, to set the course of the future of media.

The terms of the deal – whereby AT&T will pay half in cash and half in stock – were unanimously approved by the boards of both companies.

Not surprisingly, Donald Trump slammed the deal with his usual hairdryer routine, whining: “This destroys democracy.”

Whether Trump is right or wrong, the deal creates one of the world’s largest media, TV and telecoms firms – you can see why even Apple was interested.

More importantly, it signals the next pillar in the convergence of technology and media, ushering in an age where telecoms giants require media platforms and specifically, content, to add to their potency.

You can already see forms of this new media future in Ireland and the UK, where Sky has been developing its own content as well as apps and VR. Virgin Ireland has also acquired both TV3 and UTV, and Eir has been beefing up its TV services – namely Eir Sport – after acquiring Setanta. Vodafone has also stepped into the TV business with its own broadband-based service.

The next piece in the jigsaw could be a major telecoms giant circling next-generation TV and movie services like Netflix. Anything is possible.

AT&T clearly envisions synergies across TV, mobile and broadband, especially in its own over the top (OTT) and TV Everywhere product segments.

It also represents the first stage of a long overdue fightback by the telecoms industry against the activities of OTT players like Google and Facebook/Whatsapp, which have developed enormous digital businesses on the back of networks they did not build themselves.

“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,” said Randall Stephenson, AT&T chairman and CEO.

“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.”

The new moguls

It is a fascinating time for the media industry; pummelled and transformed by shifting consumer behaviour, the arrival of the smartphone and basically screens everywhere you look.

This transformation has decimated newspapers who have not yet figured out a realistic revenue model, having given away content for free for decades.

The transformation has in many ways made good quality TV series more viable than Hollywood blockbusters.

The transformation has given us new players in the form of Netflix, and turned once free-sheet hipster magazines like Vice into global, multi-billion-dollar media giants.

Lamentably, the transformation has also led to waves of piracy and torrenting, which accompanies the release of new seasons of hit shows like Game of Thrones.

As one generation of moguls like Murdoch pass the baton to a new generation of players in a world where media is everywhere, one thing holds true: content is king.

“With great content, you can build truly differentiated video services, whether it’s traditional TV, OTT or mobile,” Stephenson said.

“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 headquarters in Manhattan. Image: emin kuliyev/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years