Telecom Management Review: 4th Qtr. of 2016
There is, has been, and will continue to be speculation around many aspects of the recently announced AT&T agreement to acquire Time Warner. The areas of conversation are based around whether or not it is related to the likelihood of the deal being approved by regulators, or President Elect Donald Trump’s positioning on the deal, or the soundness of the business decision referenced against the 2011 Comcast acquisition of NBCUniversal (and followed by its announcement to launch its own mobile service in 2017 via an MVNO agreement with Verizon). This agreement will help catapult Comcast’s position in the mobile / wireless arena as they already have 28 million existing customers to market to, 15 million Wi-Fi hot spots to utilize, and the ability to offer attractive bundled services and NBCUniversal content.
As for the AT&T / Time Warner merger, AT&T needed to move on this deal to maintain a competitive position in a rapidly changing telecommunications environment. Its traditional business has encroachment stemming from big names with deep pockets. Microsoft, Amazon and Google have massive cloud infrastructure and all three are directly, or in partnerships, deploying subsea fiber optic cables with connectivity capable of transporting data that reach speeds of over 100 petabit × kilometer per second on the internet. (Wikipedia)
The business is changing and will continue to change and will favor cloud and mobile operators. For AT&T, as mobile operator, Time Warner brings significant premium content. AT&T needs to distribute premium content via its vast mobile network and attractively package DirecTV and DirectTVNow thus, reinforcing its mobile offering.
In 1996, Bill Gates declared that ‘Content is King’. Perhaps the appropriate update is ‘Content over Mobile is King’. AT&T and Comcast are betting on it.