Media distributors like AT&T, who have acquired DirecTV and offers movies and shows to more than hundred million subscribers of their internet, wireless and video services have argued for years over the best plan to withstand disruptions that are brought about by the latest online services like Hulu and Netflix.
With the surprise eighty five billion takeover of Time Warner, AT&T CEO Randall Stephenson is betting that the telecom companies that should survive in the world of smartphones and streaming should be both content and service centric. “The future of mobile is video, and the future of video is mobile,” he said after announcing the merger deal with Time Warner.
AT&T wants to offer programming to their users as per the wish of the consumers. It can be as streaming on mobile phones, or as broadcast on television sets. This is why AT&T is hungry to own CNN, HBO, and other contents of Time Warner Inc. On the other hand, Time Warner has a vast library of movies like the Harry Potter films and much popular TV series like Game of Thrones, and they are among the prolific producers in Hollywood with an annual revenue of twenty eight billion US dollars.
Analysts say that if Time Warner did not see a future for them as a standalone content creator, it is a troubling sign for the other cable channel owners too. AT&T’s move “is likely to force a number of other management teams to act, even if they do not recognize the need to do so yet,” said a Barclays analyst. Both AT&T and Time Warner are aggressively promoting their mega-deal by boasting on the benefits to others.
It is reported that AT&T and Time Warner were separately working to make it easy for the users to watch shows and movies online. As part of this move, AT&T is launching the DirecTV Now service in November, which is priced at thirty-five dollars per month.
Pay-TV service providers have been merging to improve their negotiation leverage over the increase in prices by media companies for their content. The AT&T Time Warner merger, if approved by the Federal Communications Commission and Department of Justice, could lead to a rush of consolidation as the various media firms jockey for positions in the new order.