AT&T + Time Warner:

Good for the people? Or Bad?

By Shlomo Maital


   AT&T has just announced it is acquiring Time Warner for $85 b. The deal must be approved by the FCC Federal Communications Commission and antitrust authorities.

   What is going on here?

   Frank Biondi, former head of media giant Viacom, describes it succinctly. AT&T has 125 cell phone customers and a large number of cable TV customers. It is essentially a US ‘media and communications’ distribution company, one of the biggest. AT&T was once huge, was broken up by an aggressive anti-trust judge, and is now reforming and again becoming a giant player.

   Time Warner, including HBS and CNN, is a ‘content’ company. It creates the content, like the hit series Game of Thrones, that AT&T distributes.

   So, Biondi says, AT&T is buying, for $85 b. (14 times the value of Manchester United, for instance) “access to creative talent”. Because today the value in communications is not in the infrastructure and distribution, but in what you put onto this infrastructure. AT&T is buying a seat at the creativity table.

     Will AT&T favor, like a monopoly, content its own companies create? Probably not. If AT&T customers want to watch something else, and AT&T fails to provide it, they will lose millions of customers in the blink of an eye.

     I think that what is interesting about this mega-deal is this:   Ideas have become hugely valuable and creative talent is now the focus of competitive strategy.   If you are creative, if you have ideas, the AT&T+Time Warner deal says: The future is yours.