M&A : Will AT&T reshape the Media Landscape?
Mergers and Acquisitions: Will AT&T reshape the media landscape?
More than 2000 years ago the Greek philosopher Heraclitus already knew: “The only thing that is constant is change”. This is especially true in today’s economy with its continuous technological innovation. Industries such as the media industry are changing quicker than ever. In 2016 AT&T announced that it is planning to purchase Time Warner. The combination between the 2nd largest internet provider and the 4th largest media company in the US would rival some of the biggest mergers in history. At this moment the $85 billion deal is on hold as the Trump administration’s Department of Justice (DOJ) filed a lawsuit against the merger based on antitrust grounds.
If the merger would happen AT&T would gain control over some of the
most valuable media brands. Time Warner owns various networks such as HBO (Game of Thrones, The Sopranos, The Wire…), TBS, TNT, Cartoon Network and the news channel CNN. AT&T would also own all of Warner Bros., which includes the Warner Bros. movie studio (Harry Potter, Inception…) and New Line Cinema (Lord of the Rings, The Notebook….). Add to this the fact that AT&T would also become the owner of the Warner Bros Interactive Entertainment division (Lego, Batman…) and many lucrative sports broadcasting deals, and you see how huge the impact of this deal would be.
The merger would create one of the most powerful combinations of content and distribution in the US. This excessive market power could enable AT&T to make other video distributors less competitive by raising their prices. They could also raise their price towards creators of media content. Such an increase in price always gets passed along to the consumer. The case now heads for an early trial in March. To be continued…