AT&T, Time Warner, and Digital Convergence

by Ian Rosenwach on 10.25.2016

161022192805-att-timewarner-merger-graphic-large-169

“The question is, are people really going to watch what we make on a computer screen or not,” said Bewkes. “I think an awful lot rides on whether that happens or not.” – Jeff Bewkes in 2000 at the time of the AOL/Time Warner merger (to Kara Swisher)

AT&T is in the process of acquiring Time Warner. There are politicians raising flags but this is business as usual. The likely outcome is the deal goes through, perhaps with some organizational adjustments to preserve the journalistic integrity of CNN.

Living in a Multi-screen World

Time Warner CEO Jeff Bewkes justifies the deal as a necessity due to the fact that we now live in a multi-screen world. Content has been set free.

imageedit_1_7686271920

It’s not people watching on “computer screens” as Bewkes’ quote from 2000 suggests, but the fact that computers have permeated everything we do from watching TV to talking on the phone to reading.

Each of these touchpoints becomes an opportunity to consume video content.

This upends the traditional content distribution business because there is no longer a single access point. AT&T controls distribution (I’d argue AT&T is a distribution, or maybe a data company. Certainly not a phone company) and can help Time Warner reach multiple screens in a simplified, cost-effective manner.

The Disruptors

Apple and Google are the barbarians at the gate in this battle, and to a lesser extent Hulu, Netflix, and Amazon. They’re the companies promoting new distribution methods (YouTube + Chromecast, Apple TV) and control the operating systems (Android and iOS) in our life.

cordcutting-100540356-gallery

The biggest obstacle the disruptors face is access to popular content. That’s controlled by companies like Time Warner and the AT&T acquisition can be interpreted as a defensive move against a computer-centric future.

That being said, fair access to content is one aspect of the deal regulators would be wise to analyze. Perhaps some protections could be put in place to ensure Time Warner doesn’t heavily favor AT&T in their distribution deals.

Consumers deserve choice, and in this case it’s the choice to watch what they want how they want to watch it.

(Update – Today AT&T announced DirectTV Now which is being positioned as a $35 “skinny bundle”. Think the timing was a coincidence? Nope! They can now point out to regulators that they are supporting innovation, just like Apple and Google. But the devil is in the details – we’ll see how broad the content is and how easily accessible and independent the service is.)

Just A Matter of Time

I’m betting on a future where consumers reach content, as opposed to content reaching consumers.

14w-atwork-boss-c-ta

Consumer behavior is changing as people become more willing to put in the effort, and have the know-how, to find cost-efficient ways to watch what they want to watch. As demographics change a more technically savvy generation will be in the majority.

And that’s one thing that old media can’t fight.

Previous post:

Next post: