If you’re not a media wonk, it can be hard to really care about things like the $80 billion deal between AT&T and Time Warner. But you should. You definitely should.
Time Warner has a lot that TV, movies and sports people love. Enjoy Game of Thrones? TW owns HBO. Like the NBA? TW has that on TNT. Into DC Comics movies? TW owns Warner Bros. movies.
AT&T, on the other hand, mostly operates wireless, telephone and cable networks touching millions of Americans.
These two companies are already huge on their own. Together, AT&T and Time Warner would form one of the most powerful media companies in the world, making a serious impact on the overall market as well as what ends up being offered to consumers.
And there’s more at stake than two major U.S. companies. AT&T wants to buy Time Warner so that it can gear up for the brave new world that we’re all heading toward. Whether we’re (and most importantly whether the federal government is) OK with this deal will be an important decision in how that world is shaped.
The big get bigger
Media and distribution companies just keep getting bigger, and then buying each other to get even bigger.
This isn’t a bad thing on its face. But decades of consolidation across the country have resulted in a relatively small number of huge companies that don’t necessarily have to compete as much when there’s a reasonable number of smaller companies.
There’s already speculation that the AT&T/Time Warner deal will push other companies to also unite so that this new mega-corporation can’t push them around as easily.
Heck even Donald Trump is tired of all these companies just swallowing each other.
The not-so-neutral net
Net neutrality, the concept that all traffic flowing across the internet should be treated equally, is extremely important in terms of the AT&T and Time Warner deal.
AT&T, which had previously just been the pipes through which you accessed Game of Thrones, will now own that show and plenty of other high-end content. Without net neutrality, AT&T would naturally want to make it easier for its customers to access HBO, and make it harder for non-AT&T customers to access.
In a world like that without net neutrality, consumers suddenly have to start making decisions about which content they want to get in an easy and timely manner. Do you go with Comcast so you can watch Saturday Night Live through Comcast-owned NBC? Or do you stick with AT&T so you can watch Games of Thrones?
There’s an ongoing legal battle over net neutrality. It shouldn’t be taken for granted that the internet will remain an equal playing field. If it doesn’t, AT&T owning Time Warner suddenly becomes a very important deal for everyone.
Even with net neutrality, there’s a reason that this mega merger could impact everyone zero rating.
Zero rating is when a service provider like AT&T does not count content consumed on its network toward the data plans of its customers. Some providers have already struck deals so that users can do things like stream music without worrying about how many megabytes it will cost them.
With AT&T as the second biggest wireless distributor in terms of subscribers, the company could now start offering all Time Warner content without it counting against your data plan.
This suddenly becomes a big advantage for AT&T over its competitors. Want to watch NBA on your phone? Well then you better use AT&T.
It’s not just TV, it’s HBO (and much more)
To give you an idea of all the stuff that Time Warner owns (and AT&T will probably own if the deal goes through), here’s a brief summation of the content that AT&T will own if the deal goes through.
HBO: Game of Thrones, Westworld, Girls…whatever you else you watch on the gold standard of premium cable networks. HBO is the crown jewel of this deal. The company is now synonymous with the absolute best TV and is pushing into other areas as well with Vice and Bill Simmons.
Basketball rights: By buying TNT, which is part of Turner, which is owned by Time Warner, AT&T gets its hands on major NBA basketball rights. TNT also has college basketball rights. Sports rights are now seen as some of the most valuable in all of media for their ability to draw live audiences (the only antidote to delayed DVR viewing), as well as the burgeoning online highlight industry.
DC Comics: Time Warner owns Warner Bros. movie studios, which makes the DC Comics movies. Maybe they aren’t quite Marvel, but the DC universe is working to become one of the biggest movie franchises around.
CNN: The decline of cable news is well documented, but CNN is still a premier news brand that has also become a force online.
Kids content: TV made for kids has become one of those quietly important pieces for many media companies. Time Warner includes Cartoon Network.
Hulu: Time Warner recently bought a 10% stake in Hulu, which is working to become a rival to Netflix. Time Warner also has stakes or ownership in a bunch of other digital media properties including Bleacher Report and Time Warner Investments, which owns pieces of a variety of startups. Turner has also made some investments, including in Mashable.
Your precious, precious data
It used to be enough just to make stuff and get it to people. Not anymore.
The dream now is making content and taking it right to the consumer, whose habits you can track and analyze. This usually means being able to present customers with content directly, like AT&T could do with Time Warner’s pieces.
Disney boss Bob Iger recently summed it up well, saying that it even having ABC, ESPN, Pixar, Marvel, Star Wars and the rest of the Disney franchise fell short.
“In todays world, its almost not enough to have all that stuff unless you have access to your consumer, who because of technology is providing you with incredible data to provide the consumer with a more customized and personalized experience that can be monetized better,” Iger said in a recent interview.
This can be a good thing; Netflix is credited with coming up with shows like Stranger Things thanks to its trove of data. But it also means that yet another company is tracking what you’re consuming.
Not enough? How about the future of the U.S. media market?
Regulation is the boring, but extremely necessary part of the AT&T and Time Warner equation.
The Federal Communications Commission will take a long, hard look at this deal to determine if it will hurt consumers. If they decide it will, the FCC could either block the acquisition or require AT&T/Time Warner to make serious caveats such as having to abide by net neutrality principles even if the current regulations are thrown out.
AT&T has already lost out on a major merger due to FCC intervention. The company in 2011 tried to buy T-Mobile. AT&T faced an uphill battle because it was trying to buy a very similar company, and the deal would have made AT&T/T-Mobile an industry titan.
The AT&T/Time Warner deal doesn’t have that problem. Buying content would transfer AT&T into an entirely different business, just as it did for Comcast when it bought NBCUniversal. That deal was given the OK, but not without plenty of criticism that continues to this day.
If regulators want to draw a line in the sand (in this case, under the administrations of either Donald Trump or Hillary Clinton), then this merger would represent a big chance to send a message to companies: Stop trying to form gigantic mega-corporations.
Read more: http://mashable.com/2016/10/22/yes-you-should-care-about-att-time-warner-deal/