A Wrinkle with the Logic of AT&T-Time Warner

One of the questions hanging in the air after AT&T announced it wants to buy Time Warner for $85 billion is: Who will follow? Will other tech companies, including those that sniffed around Time Warner, like Apple, or Amazon.com and Google, look to buy a studio to lock up programming?

The rhetoric coming out of AT&T might lead one to think the time has come that they must. In announcing the deal, AT&T CEO Randall Stephenson declared “only AT&T will have the world’s best premium content with the networks to deliver it to every screen.” It’s as though he expects AT&T’s customers to get exclusive access to programming coming from Time Warner properties such as HBO and Warner Bros. film studio. If that was true, any other companies in video entertainment might finally, after years of thinking about it, secure their own TV and film studios.

But don’t hold your breath for more deals.

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Also good news for rivals is that the deal itself will distract both AT&T and Time Warner for at least 12 months and more likely two years. AT&T says it expects to close at the end of next year, reflecting how long it will take to get regulatory approval. Then the integration will take some time. How the two companies will overcome cultural differences between telecom and entertainment is a whole other issue. AOL and Time Warner clashed so badly there that the merger eventually fell apart.

Francois Guerin commented on this article.
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It’s worth remembering that Time Warner spun off its cable arm, Time Warner Cable, after years of failing to achieve economic benefits from owning both programming and distribution.