AT&T-Time Warner: Apple angle, effect on consumers and more

Key points from the $85.4 billion mega-merger between AT&T and Time Warner, which was announced over the weekend.

What do Apple and Silicon Valley have to do with this? Before the deal was announced, the Wall Street Journal reported Friday that Apple had approached Time Warner a few months ago about a tie-up, although the talks didn’t go past the preliminary stage. Apple has long been said to be working on an internet television service, but an apparent lack of content deals has held it up. Time Warner — which among other things owns CNN, HBO, TNT and Warner Bros. — would give Apple access to plenty of content.

However, Time Warner CEO Jeff Bewkes reportedly said AT&T was the only company to approach his company.

Whether Apple was interested or not, here’s another connection. Business professor Scott Galloway of NYU told Bloomberg TV today that Apple and other Silicon Valley companies are “running up against the same issue that AT&T and Verizon are running up against, and that is that they are running out of growth.” That’s why he and other experts are saying that AT&T, Verizon and other companies are looking to media and content companies, such as Time Warner and Yahoo, respectively.

The difference between the two proposed deals, according to Galloway: “Jeff Bewkes and the TWX board are the opposite of  Yahoo (who they are being compared to). Selling at the high (cable in structural decline), great management, what shareholders want from their fiduciaries. Time Warner (George Clooney), Yahoo (George Costanza)…”

Would consumers be hurt or helped if AT&T bought Time Warner? AT&T’s sell: This deal will give customers more ways to access TV shows and movies on more devices. Those who are critical of the deal include Michael Copps, a former FCC commissioner and now a special adviser to advocacy group Common Cause.

“Allowing a communications behemoth like AT&T to swallow the Time Warner media empire should be unthinkable,” Copps said in an emailed statement. “The sorry history of mega mergers shows they run roughshod over the public interest. Further entrenching monopoly harms innovation and drives up prices for consumers.”

Politicians on both sides of the aisle are skeptical about the deal, with both Donald Trump and Hillary Clinton’s camps expressing concern.

More about why AT&T and Verizon feel pressure: This circles back to what NYU professor Galloway said above. T-Mobile reported earnings Monday, and unlike Verizon and AT&T, the nation’s Nos. 1 and 2 wireless carriers, it’s adding subscribers. Sprint also added subscribers, it said when it reported earnings last week. So as large as they are, AT&T and Verizon are looking for other places for growth.

AT&T shares are down about 1.7 percent and Time Warner shares are down more than 2.5 percent Monday.

 

Photo: A trader walks by the post that handles Time Warner on the floor of the New York Stock Exchange, Monday, Oct. 24, 2016. AT&T’s $85.4 billion purchase of Time Warner represents a new bet on synergy between companies that distribute information and entertainment to consumers and those that produce it. (Richard Drew/AP)

 

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  • domahman

    verizon got the short end of the bargain.

 
 
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