LOS ANGELES — Superman, Bugs Bunny, Larry David and Wolf Blitzer could have a new corporate home soon, and depending upon who you ask, that’s either really bad for consumers, or a golden opportunity.
Saturday, entertainment powerhouse Time Warner, which owns HBO, CNN and Warner Brothers, agreed to be acquired by wireless giant AT&T in an $85.4 billion proposed transaction.
AT&T, in a news release, said consumers would see a stronger "alternative to cable & other video providers," better value and more choices.
However, the deal “raises major challenges for consumers, subscribers and competitors,” says Jeffrey Chester, executive director for the Center for Digital Democracy, a Washington-area advocacy group.
The deal follows recent corporate marriages — AT&T rival Verizon’s alliance with AOL in 2015 and proposed acquisition of Yahoo, and cable TV giant Comcast’s swallowing up all of NBC Universal in 2013. AT&T added satellite provider DirecTV in 2015.
“This is all about tracking and targeting us regardless of whether we use a mobile device, PC or TV,” Chester says. “Through the growing capability of mobile phones to follow and geo-target us everywhere we go — the supermarket, while in a car, or even on the street, these new broadband ISP/mobile/TV giants are extending their powerful digital tentacles further into our lives.”
But Peter Csathy, the CEO of industry consultancy CREATV Media, says consumers will benefit from the marriage, with more programming available than ever before for mobile consumption.
“It’s war now,” he says. “You have this growing number of behemoths all competing against each each other, and the big weapon is content.”
Comcast and Verizon added content with their deals — and while it’s too early to say whether the companies have profited from such arrangements, mobile phone sales have been flat (growing just 0.3% year over year in the second quarter, according to market tracker IDC) and thus, the corporations need something new to keep revenues up — content, Csathy says.
“The natural thing is to transform themselves to media companies,” he says.
The Time Warner that AT&T will get is very different from the company AOL acquired in 2000 in what’s been called the most disastrous corporate merger ever.
Back then, Time Warner had a thriving music division (with artists like Madonna and Eric Clapton), a top cable TV system provider and the Time Inc. magazine portfolio, which included Time, Fortune and Entertainment Weekly. All three divisions have since been shed.
The Time Warner cable division has few friends in the Los Angeles area after it signed a rich deal with the Dodgers baseball team in 2014 to carry their games on a local pay-TV Dodgers channel for $8.35 billion. The result — because of the sky high price tag, most cable operators and DirecTV refused to carry the channel, resulting in a near blackout locally.
Independent analyst Rob Enderle says such exclusives would be unlikely to happen in an AT&T-Time Warner marriage, because competition is so intense, consumers would just shop elsewhere.
“It would be really foolish for them to do that.”
According to Jackdaw Research, Verizon Wireless leads the wireless race with a No. 1 market share and 142 million subscribers, compared with 131 million for No. 2 ranked AT&T. In third place with 67 million subscribers is T-Mobile, followed by Sprint at No. 4 with 58 million subscribers.