Big tech-media mergers raise fresh privacy concerns
Phone companies and content providers have already begun hooking up in Europe
WASHINGTON, Oct 25, (Agencies): They know how you browse the internet, your favorite TV shows and where you shop and travel.
Data collected by internet and media companies is a powerful tool, and the big mergers planned by AT&T with Time Warner and Verizon with Yahoo offer those firms more data that can be used to target consumers with content and advertising.
Privacy advocates say the prospect of firms using all that online and offline data without safeguards could be alarming.
“Twenty-first century media is all about the ability to gather information on a single individual regardless of where they are — whether they are using mobile phone or watching TV or in a grocery store,” said Jeffrey Chester of the Center for Digital Democracy, a privacy rights group.
The $85 billion deal unveiled Saturday would combine AT&T, one of the largest mobile telecom and residential internet operators, with Time Warner, the media-entertainment giant with powerful brands including the Warner Bros. studio, HBO, CNN, Cartoon Network and a major online game studio.
AT&T chief executive Randall Stephenson said the deal would offer better choices to both consumers and advertisers. “We’ll develop content that’s better tailored to what specific audience segments want to watch, when, where and on which device,” he said.
“And we’ll use the insights to expand the market for addressable advertising. Addressable advertising is far more effective and more valuable both to the advertisers and to our customer.”
Google and Facebook have become leaders in online advertising by analyzing consumers’ web browsing habits, but Chester said merging technology and media groups is troubling because of the array of data from different sources, including location data from mobile phones even when they are not in use.
“Those companies that control our data — as well as the devices and applications we rely on (especially mobile) — will be formidable gatekeepers,” Chester said.
“They will be able to influence the content and communications we both receive and send. It’s not too far out to see the next deal be Google/ Comcast or AT&T/Time Warner/Facebook.”
The tie-up comes as the Federal Communications Commission is set to consider privacy rules for internet service providers like AT&T and Verizon.
The rules would require consumers to “opt in” to allow companies to combine data from different sources to deliver ads and content.
“The FCC privacy rule is critical to ensuring there are safeguards,” Chester said. “Right now there are no safeguards.” Greg Sterling of the Local Search Association, a trade group of firms using location-based marketing, acknowledged that many consumers are fearful of how their data is used for targeted messages.
Meanwhile, the $85-billion merger between AT&T and Time Warner is making waves across the US, from Hollywood to Wall Street to Washington. But in Europe, the strategy isn’t a new one: Telephone companies and content providers have already begun hooking up — if not yet on the scale of AT&T and Time Warner — as the two sectors try to map out a money-making strategy in the digital world.
France’s SFR, Spain’s Telefonica, and the UK’s BT are among the big telcos that have dived into the content business, to varying degrees. On the flip side, one of Europe’s biggest content providers, Vivendi, which owns payTV service Canal Plus, is now courting telecom companies.
A look at what’s happening in key European markets:
In France, telco group SFR, which is owned by Netherlands-based Altice, is the latest telecom company to seek sources of exclusive content, via cofinancing, co-production or first-run acquisition of sports rights, films and series.
In September, SFR launched Altice Studios to co-finance or co-produce content, and Altice Channel Factory to create dedicated channels. The telco also created an SVOD service, Zive, and pre-bought its first premium series, “Medici: Masters of Florence,” a historical drama starring Dustin Hoffman and Richard Madden. At a confab in France over the weekend, SFR chief Michel Combes said his company was aiming to compete with Netflix using a local approach rather than a global one, investing in homegrown content wherever it’s established.
“In France, telecom operators are now seeing content as a differentiator and appear to be ready to spend more money on content and use content more prominently as a way to justify higher prices,” said Francois Godard, at Enders Analysis. French media giant Vivendi’s on-again-off-again strategy regarding telecoms also now seems to be on again. Last year, the conglomerate sold all its assets in SFR to Altice and its assets in Brazilian group GVT to Spain’s Telefonica in order to become a pure-play media player. But it’s back in business with telecoms as it strives to double the subscriber base of its payTV group Canal Plus and expand the exposure of its content.
This year, Canal Plus Group inked carriage deals with Free and Orange, and is closing a deal with Bouygues, another French telco. Vivendi also just signed a pact with Spain’s Telefonica to distribute Vivendi’s Studio Plus, which produces mobile-native short-format series, in Latin America.
There has been speculation of a potential takeover of Canal Plus Group by Orange, but the rumor has not been confirmed by either party. JeanBaptiste Sergeant, an analyst at MainFirst Group, said such a takeover was unlikely because it would clash with Vivendi’s current strategy of striking deals with as many telecom companies as possible in order to expand its subscriber base. For its part, Orange, the first French telco to invest in content (sports, films and TV shows) 10 years ago, has cooled on that strategy, with Orange President Stephane Richard saying that the actual payoff doesn’t justify the effort. Richard, who came on board in 2011, confirmed last February that Orange would remain a distributor, and would not be diving into content production like SFR.
In Spain, the country’s biggest telco, Telefonica, paid EUR725 million ($788.7 million) to take total control of the country’s biggest pay-TV operator, Canal Plus Spain. The deal was finalized last year.
Telefonica’s subsequent Fusion quadruple-play offer, which bundles Canal Plus with telephony and Internet, “is the one thing that has helped Telefonica maintain lower churn figures,” one analyst said, adding that Telefonica’s contents drive “is a fundamental part of its strategy.