Thomas Gryta and Keach Hagey of The Wall Street Journal have the news:
The acquisition pushes the carrier deeper into the traditional entertainment business at a time of stalled wireless growth. For Time Warner, the deal represents a victory for Chief Executive Jeff Bewkes, 64, who took some heat from investors for rebuffing a takeover bid two years ago from 21st Century Foxat $85 a share. (21st Century Fox and Wall Street Journal-owner News Corp share common ownership.)
It pairs AT&T’s millions of wireless and pay-television subscriberswith Time Warner’s deep media lineup including networks such as CNN, TNT, the prized HBO channel and Warner Bros. film and TV studio.
For AT&T CEO Randall Stephenson, the deal will help the carrier potentially find new areas of growth as its core wireless business has become saturated and its market share leaves little room for acquisitions. For Time Warner, the tie-up comes amid pressure for media companies to bulk up or join with larger entities in the face of consolidation among pay-TV distributors and viewers increasingly leaving their expensive cable packages for cheaper online streaming options.
A merger of the companies would be the most ambitious marriage of content and distribution in the media and telecom industries since Comcast Corp.’s purchase of NBCUniversal and would create a behemoth to rival that cable giant.
Drew Harwell and Christian Davenport of The Washington Post examine how tech companies are focused on content:
AT&T, Amazon, Google and Verizon have all surged into original content, believing it offers them a lucrative foothold into viewers’ pockets and living rooms and a unique bulwark against the rapidly changing Web and cable television landscapes.
But the consolidation of media into a fewer empires has also renewed concerns over the fairness and freedom of tomorrow’s entertainment. Telecom gatekeepers such as AT&T could steer customers to their own offerings, muscling out independent artists and limiting choice. Or they could exclude non-customers, forcing curious audiences to subscribe or go without.
“You have a big distributor owning some of the largest networks. Is everyone going to have equal access to those networks?” said Eric Handler, a media and entertainment analyst for MKM Partners.
Roger Yu of USA Today looked at AT&T’s growth strategy:
The agreement, if approved by regulators, would be one of the largest acquisitions ever in the telecom-media sector. It also lays bare AT&T’s grand ambition to control sizable market shares in both content and distribution businesses, a prospect that will surely trigger concern and scrutiny among federal regulators and consumer rights advocates.
A year ago, AT&T shocked Wall Street by paying $48.5 billion to buy satellite TV provider DirecTV, giving it an instant access to nearly all domestic markets for selling its pay-TV service and Internet-TV bundles. Analysts suggested at the time that AT&T would look to beef up its content offerings — already made attractive by DirecTV’s NFL Sunday Ticket deal — to fully seize the benefits of the acquisition.
AT&T’s growth strategy also entails the need to evolve its main business lines – providing Internet and wireless services. While customers’ bills for their telecom needs seemingly grow every year, the Internet market – wired and wireless – in the U.S. is saturated and growth potential is limited.
DirecTV and AT&T’s other pay-TV service, UVerse, provide a level of revenue diversity. But investors still have been clamoring AT&T to look elsewhere for growth, particularly as the market turbulence brought on by streaming technology and “cord-cutting” provides both opportunities and threats. With the integration of DirecTV largely completed, AT&T planned on focusing on buying more media and entertainment content companies.
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