Close to the merger agreement
A number of media reports said that AT&T will acquire Time Warner at a total price of approximately $85 billion, and the two parties are in principle close to reaching a merger agreement. It is said that the two parties may announce relevant details on Sunday. Driven by this news, Time Warner shares rose 7.82% on Friday, closing at $89.48, and trading after the day rose another 4% to $94.00.
Time Warner Group is a world-renowned TV media giant with HBO, Warner Bros., CNN, TNT, TBS and other well-known TV channels. Once the deal is successfully concluded, HBO, Warner Bros., CNN, TNT, and TBS will also change their status and become the division of AT&T.
AT&T is now the top telecom operator in the US market. Prior to this, AT&T also acquired the US satellite TV giant DirecTV, AT&T has gained a significant share in the home TV service market.
According to "The Hollywood Reporter", if the two sides reach a deal agreement, then former Fox executive Peter Chernin will be responsible for Time Warner's business operations.
At present, both AT&T and Time Warner declined to comment on the above news.
Traditional business competition intensifies AT&T's aggressive entry into new areas
According to sources, Randall Stephenson, AT&T's chairman and chief executive officer, is actively adding more content and TV programming to the company. In the TV media market, Time Warner has always been favored by all parties. In 2014, media tycoon Murdoch’s 21st Century Fox Company once said it would acquire Time Warner Group (valued at $75 billion), but was met by Time Warner’s then chairman and CEO Jeff Beowx (Jeff Bewkes)'s refusal.
Looking at the developments of the past few years, the US telecom industry giants, including Verizon and AT&T, are chasing more digital content. According to the article on USA Today website, traditional cable TV and satellite TV services are now being abandoned by young users, and viewers are keen on more online video programs. Therefore, traditional telecom operators are not willing to act as an Internet channel, but strive to expand more revenue-generating channels, and hope to obtain advertising revenue and subscription revenue through digital content.
For example, AT&T's competitor Verizon has spent huge sums of money to acquire the core portal and search engine businesses of AOL and Yahoo. To this end, AT&T has stepped up its pace to acquire companies such as DirecTV, so it has a large number of home TV users, in addition to a large number of mobile communications and broadband users, AT&T hopes to bring more quality video content to these users. In addition, with the help of CNN, AT&T may also become an important news content provider, thereby increasing the revenue-generating channels.
Why AT&T and Time Warner are "marriage" - make up for AT&T's own shortcomings
Time Warner has a number of key assets, including the pay-per-view movie channel HBO, sports and Hollywood studio Warner Bros. In addition, Time Warner has extensive experience in operating cable TV business. For AT&T, the acquisition of Time Warner will be a good opportunity for the company to increase revenue-generating channels.
The Washington Post quoted some analysts as saying that AT&T’s acquisition of Time Warner will be an unprecedented “dramatic change†in the media and technology industry, and the deal will also transform traditional telecom operators into what the US has never had before. Media giant. The deal may also allow AT&T to control a number of entertainment branding projects of great value, such as television, movies, video games, mobile and residential Internet services.
In addition, this possible transaction highlights a major trend in the modern media business, where technology and telecommunications giants control profitable, high-profile content that has been passively supplied.
Analysts also believe that after AT&T's acquisition of Time Warner's transaction, AT&T will also control some of the world's most valuable media brands, and may also turn the traditional wireless carrier AT&T into a full-fledged entertainment giant, and will AT&T has opened up a whole new chapter of history, and will further promote Internet suppliers to play a more important role in changing the way users work and leisure.
According to the New York Times, AT&T aims to create a new content empire through the acquisition of Time Warner. The New York Times pointed out that for companies like AT&T to sell consumer cable and Internet services, it is not enough to just distribute entertainment content and programs, so they want to own these businesses and create a new empire. Under such development momentum, Time Warner has become the target of the industry's competitive acquisition because of its various businesses and channels. Of course, AT&T also favors Time Warner.
Limited acquisition target
Historically, compared with industry peers, AT&T is still inferior in creating content empire, and has also ended in failure to bid for Yahoo's core assets. However, AT&T has worked hard to improve its content service capabilities, such as the acquisition of DirecTV, and in 2014, together with the Chernin Group, formed a joint venture to invest in the media business and began offering Internet streaming video services.
AT&T has a tendency to acquire industry leaders, so the company has taken Time Warner and Disney as acquisition targets. In comparison, Disney's market capitalization of $150 billion makes AT&T feel weak, while the other two companies, Viacom and CBS, are firmly controlled by the Redstone family. As a result, Time Warner became the target of choice for AT&T.
Adapt to market trends
The New York Times article pointed out that AT&T's acquisition of Time Warner is at a time when the company is trying to build an entertainment empire to maintain its competitiveness. As consumers increasingly support cheaper digital services, a large number of traditional telecom giants are expanding their entertainment services to maintain their competitiveness, and AT&T is no exception.
It can be said that AT&T's acquisition of Time Warner is also in line with a market development trend. Previously, the industry has seen a wave of technology giants acquiring entertainment media, and these acquisitions have also dramatically changed the way viewers spend their leisure time and media spending. For example, Comcast acquired NBC Universal, Google (microblogging) into the field of TV streaming, and Amazon and Netflix competed to spend a lot of money to develop streaming media and other services.
These business development trends have shaken the traditional TV business. Some analysts have pointed out that this huge wave of change in the media world may just begin. In the future, a wave of bigger waves will also surge, so more technology giants will compete to enter this market.
No, at a time when AT&T's news of the acquisition of Time Warner is overwhelming, the industry has heard that even Apple has contacted Time Warner about a few months ago to discuss possible mergers and acquisitions. However, Apple has refused to comment on this news.
Enhance AT&T's competitive strength
The Washington Post quoted sources as saying that AT&T’s acquisition of Time Warner would be one of the most powerful integrated transactions in content and distribution, and would have far-reaching implications, such as AT&T’s potential to leverage its various business units. To provide users with a more diverse cross-promotion business, it is similar to the company's integration of cellular services with the satellite TV company DirecTV.
After the acquisition of Time Warner, AT&T will be able to gain more profits by licensing TV dramas and movie copyrights to other cable companies, and to compete fiercely with other companies by launching its own pay-TV content.
Undoubtedly, having more content will help cable and telecommunications companies provide strong support for bargaining with other content companies, especially as user demand diminishes and transitions to mobile devices and web content.
In addition, some analysts believe that the deal will also help improve AT&T's ability to fight Google and Facebook. AT&T's acquisition of Time Warner Inc. has improved its ability in the digital advertising business, helping the company better compete with Larry Page and Mark Zuckerberg to Google and Facebook have not yet had a strong place in the content field, and have a place.
Impact on the industry
The deal will have a major impact on the media and technology industries, and it will also be a microcosm of the rapid changes in the media and technology industries. As more and more users consider abandoning the traditional wired bundling service, content manufacturers and cable companies are competing to launch a new Internet business model and seeking new channels to distribute online video content. Today, the US media consumption model is shifting to mobile devices, which has spurred companies such as AT&T to invest heavily in wireless connectivity, while also forcing fixed broadband service providers to seek new competitive channels. Companies that were previously limited by technology and therefore independent of each other will now be forced to compete with each other, especially as entertainment and communications rely on the Internet.
Regulatory concerns
Some experts believe that AT&T's acquisition of Time Warner's transaction will of course be approved by US regulators. As for the conditions for successful completion of the transaction, these experts are not clear.
Regulators may be concerned that such a deal would be detrimental to healthy and orderly competition in the market. Perhaps regulators are not willing to let AT&T put Time Warner's content on AT&T's wireless or home Internet platform in an exclusive way. Of course, US government agencies will not be eager to let AT&T leave Time Warner's program out of cellular data networks.
Gene Kimmelman, a former antitrust business official at the US Department of Justice, said: "The merger will cause huge competition concerns. From a competitive perspective, such transactions will only benefit their own. Service Content."
Craig Moffett, an industry analyst at market analyst firm Moffett Nathanson, said, "There is no industry logic to integrate content and distribution. In theory, the deal sounds very good, but it really needs to Realization may not be easy. I think the merger will not be better than the average."
Antitrust business lawyer Andre Barlow said the US government may be concerned that other cable and Internet companies will not be able to enjoy Time Warner HBO and CNN after the transaction.
However, Darren Bush, an antitrust doctor at the University of Houston, said the US Department of Justice will closely follow the deal but will not block the deal. Bush also said that regulators may ask the parties to provide more information, so the entire assessment may continue for several months.
Apple pays attention to Time Warner
The Wall Street Journal quoted people familiar with the matter on Friday as saying that as early as a few months ago, Apple had contacted Time Warner to discuss possible mergers and acquisitions. Although the negotiations have not made substantial progress, Apple is still closely watching Time Warner's negotiations with AT&T.
From Apple's point of view, Apple also plans to build a network TV service and start to build its own original program. According to people familiar with the matter, Eddy Cue, Apple’s senior vice president of Internet software and services, raised the possibility last year when he met with Time Warner’s corporate strategy leader, Olaf Olafsson. The merger was only a situation that has not progressed in the future.
Risk and challenge coexist
Some experts in the industry believe that AT&T's acquisition of Time Warner will of course bring a lot of benefits to AT&T itself, as stated above. However, some analysts believe that the acquisition of Time Warner will also bring a lot of risks and challenges to AT&T.
The first is the risk of funds. In addition to regulatory risks, AT&T may need to “digest†well when it comes to acquiring Time Warner. The integrated company will have up to $150 billion in debt, although annual revenues could reach $175 billion. Under the low interest rate scenario, it is indeed more cautious to fund such large-scale transactions.
Second, some analysts still question AT&T's ability to handle the transaction and believe that the deal does not make much sense for AT&T. For example, Recode released a message saying that Time Warner has the right to play HBO, CNN, Warner Bros. and many other sports events, but if Time Warner can't sell its content to include AT&T's main competitors (such as Comcast and Verizon, etc.) Every possible issuer, then the acquisition of Time Warner will not make sense for AT&T.
In addition, few users today buy TV subscriptions from satellite vendors because they can get a lot of content from companies like Netflix, Hulu, and Amazon. Ironically, in the past eight years, Time Warner CEO Bevaux has spent a lot of time stripping the once-largest media company in the world. From these perspectives, Time Warner's ability in terms of web content may be difficult to support AT&T.
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