AT&T bid for Time Warner is a bet on syn­ergy

China Daily (USA) - - FRONT PAGE -

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.

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 the Game of Thrones tele­vised se­ries, 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 will have to sign off on the deal, not a 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”.

Se­na­tor 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. It faces new com­peti­tors for that busi­ness from ca­ble com­pa­nies. Com­cast plans to launch a cell­phone ser­vice next year.

AT&T CEO Ran­dall Stephen­son, who will run the com­bined com­pany, said 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 dur­ing a tran­si­tion pe­riod, added that more money will help fi­nance ad­di­tional pro­gram­ming and films.

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