AT&T Agrees to Buy Time Warner — Do Deals Like This Destroy America?

attThis deal was not cheap. AT&T has agreed to pay $85.4 billion for Time Warner, the home of HBO and CNN. This isn’t the only merger that has happened. It seems like distributors of media is now buying the media. And they are all merging. Soon there might not be any credible media left, no matter where you look.

By Michael J. de la Merced

In the world of media, bigger remains better.

So in the wake of Comcast’s $30 billion takeover of NBCUniversal and Verizon Communications’ serial acquisitions of the Huffington Post and Yahoo, AT&T has bought one of the remaining crown jewels of the media world.

The telecommunications giant agreed on Saturday to buy Time Warner, the home of HBO and CNN, for about $85.4 billion, creating a new colossus capable of both producing content and distributing it to millions with wireless phones, broadband subscriptions and satellite TV connections.

The proposed deal is likely to spur yet more consolidation among media companies, which have already looked to partners to get bigger. This year, Lionsgate struck a deal to buy the pay-TV channel Starz for $4.4 billion. And the Redstone family, which controls both CBS and Viacom, has urged the corporate siblings, which split 10 years ago, to consider reuniting.

AT&T and Time Warner said both of their boards unanimously approved the deal.

“Premium content always wins,” Randall L. Stephenson, AT&T’s chief executive, said in a statement. “We’ll have the world’s best premium content with the networks to deliver it to every screen.”

Most analysts and investors have noted that Time Warner was part of one of the biggest merger follies of all time, when it sold itself to AOL at the height of the dot-com boom. That combination — also pitched on the idea of uniting content and the internet — proved unwieldy and was later stripped apart to a few core businesses.

This time, however, the rise of online outlets like Netflix, Amazon Prime and YouTube and the shift of younger customers from traditional media have pressured media companies to seek out consolidation partners. These media companies are anticipating drops in fees from cable service providers and declining revenue from advertisers. Getting bigger would give them more negotiating leverage with both service providers and with advertisers.

Among their top priorities is finding new ways of reaching consumers. HBO, for example, offers its HBO Now service to deliver shows like “Game of Thrones” and “Westworld” to consumers who do not have cable subscriptions.

Even Disney, widely seen as the strongest content company, with brands like Pixar, Marvel and Lucasfilm, has been grappling with how to overcome challenges facing its network channels. ESPN, which long served as a growth engine, is now facing declining ratings and subscriber erosion, putting advertising sales into question.

“The biggest thing that we’re trying to do now is figure out what technology’s role is in distributing the great content that we have,” Robert A. Iger, Disney’s chief executive, said at a presentation at Boston College on Oct. 5. Noting the blue-chip entertainment brands controlled by Disney, Mr. Iger added, “In today’s world, it’s almost not enough to have all that stuff unless you have access to your consumer.”

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