In June of 2018, AT&T won court approval to purchase Time Warner Inc. AT&T has been pursuing this merger for some time, but was blocked back in November of 2017 by the Justice Department who claimed that since AT&T already owned DirecTV, the purchase of Time Warner (not to be confused with Time Warner Cable, which was purchased recently by Charter Communications) would give the company an unfair advantage over their competitors. Once the deal is approved, AT&T will become one of the most extensive entertainment and media providers in the country and will own some of the hottest film and TV franchises.
How This Shakes Up The Industry
The deal between AT&T and Time Warner puts the combined company in control of some of the most valuable TV franchises and media brands available now, including everything on HBO and all the channels owned by the Turner Broadcasting System (TBS). TBS also provides coverage for Major League Baseball and has under their banner sports media outlets such as the Bleacher Report and NCAA.com. It’s also possible that AT&T could come to own all of the Warner Bros. properties, which include “Harry Potter” and the “Lord of the Rings” film franchises.
In addition to film and TV, Time Warner also has an interactive entertainment branch, which publishes games such as the “Lego” series.
Ownership of these valuable properties and brands is vital for the company and is one of the reasons the justice department sought to block the merger.
Once finalized, AT&T — who is the nation’s second largest wireless carrier — will be one of the most powerful media companies in the world, with control of some of the most valuable content. With this much power, the sky is the limit to what AT&T could do with these properties.
A key weapon AT&T now has in their arsenal is the ability to bundle entertainment with the various services they provide, including cellular data plans and traditional cable and satellite plans.
Also, when you consider the fact that more and more people are consuming entertainment via their mobile devices, it’s easy to see how strong AT&T’s position is in this space, especially when they own all of the hot properties and media outlets.
What This Means for TV
Consumers over the past ten years changed the way they get TV and entertainment. While traditional cable and satellite still account for a large user base, that base is quickly turning away and seeking other options. This practice is commonly known as cord cutting – getting rid of traditional cable.
As cord cutting becomes more and more popular, companies like AT&T are scrambling to meet the demand. According to a report from the Leichtman Research Group, the major players in the pay-TV arena ( cable and satellite) lost approximately 405,000 subscribers in the third quarter of 2017, and most industry analysts say the migration away from traditional cable and satellite TV services isn’t slowing down. The report also states that people are leaving behind conventional TV for streaming services like SlingTV and DirecTV Now.
As the demand for streaming services increases, companies are stepping up to provide options in the hopes of luring customers to their platforms.
According to Forbes, Apple, Facebook, and Disney are looking to spend around $1 billion to make original content, with Disney planning on launching their own streaming service sometime in 2019.
However, thanks to the merger and the strength of their wireless network, AT&T is in the driver’s seat when it comes to TV and streaming entertainment.
Thanks to their streaming packages and traditional cable and satellite offerings, AT&T can service virtually anyone who wants to buy into what they have to offer, which thanks to the merger, is now a gold mine of entertainment.
Since the approval of the merger, AT&T launched a new streaming TV service called AT&T Watch. This streaming service is bare bones compared to their other streaming offering, DirecTV Now, and their satellite-based DirecTV.
Launched in late June of 2018, AT&T Watch gives consumers 30 channels, which include: A&E, AMC, Animal Planet, Audience, BBC World News, BBC America, Boomerang, Cartoon Network, CNN, Discovery, Food Network, FYI, Hallmark, Hallmark Movies & Mysteries, HGTV, History, HLN, IFC, ID, Lifetime, Lifetime Movies, OWN, Sundance TV, TBS, TCM, TLC, TNT, TRUTV, Velocity, Viceland, and We TV with the promise of additional channels coming online sometime after the launch. This plan is available to non-AT&T customers for only $15 per month or free for AT&T customers who subscribe to unlimited cell data plans with the company. What sets this service apart from most other streaming options in the absence of live sports, but the price puts it as one of the cheapest TV options for cord cutters currently available.
In comparison, SlingTV’s cheapest package is $25, while DirecTV Now’s most affordable offering is $35 per month.
When you add in all the streaming services available, it’s easy to see how content plays such a huge role in attracting subscribers; this is why the Time Warner library is such a massive acquisition for AT&T.
What This Means for Consumers
Although the deal between AT&T and Time Warner hasn’t been finalized as of this writing, the implication for consumers remains up in the air. Many people agree that regulators wouldn’t allow AT&T to exclude content from other wireless providers or exempt Time Warner properties from data caps, but there is precedent in the wireless space for these practices. T-Mobile allows subscribers to watch unlimited video such as Netflix without affecting their data thanks to their “Binge On” plan. While customers on AT&T’s wireless service will benefit from the merger, other customers on competing platforms could be left out, or have limited access to their favorite shows and movies, especially when it comes to mobile. For businesses, this could make keeping track of telecom services more complicated in some cases, or really simplify things.
The bottom line, however, is that since more and more people are consuming TV and movies on their mobile devices, AT&T is primed to win big thanks to their strong cellular network and massive subscriber base.