Speed to OTT Innovation Biggest Benefit of Time Warner Buy, Says AT&T CEO
AT&T expects the DirecTV Now over-the-top service launching next month to be “the big driver” of growth with the Time Warner acquisition in the fold, AT&T CEO Randall Stephenson said on a Monday analyst call about the TW acquisition, which the company said is worth $108.7 billion. “There are a lot of things we aspire to do with this platform,” he said of DirecTV Now. The AT&T/Time Warner deal is expected to close by the end of 2017, he said.
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Trying to develop “those types of capabilities with the current content providers is proving difficult,” Stephenson said. It involves “arm’s-length negotiations” with content providers that are “very protective” of their holdings, he said. “It’s just really, really hard to get these types of iterations and innovations on content done.”
Once AT&T ownership of Time Warner’s content holdings is secure, “in these over-the-top environments and platforms, we can begin to innovate our content much quicker,” said Stephenson. “We’re under the same umbrella, same ownership structure, and we can get past a lot of these content rights, and so forth, and move fast.” He and Time Warner CEO Jeff Bewkes are “convinced that as we innovate in this way and as we accelerate the pace of this innovation, it’s going to attract others to want to do the same on these platforms,” Stephenson said.
If he and Bewkes “are right about this,” and the transaction inspires more OTT innovation, the incentive to move faster on 5G deployment “is heightened,” Stephenson said. “We get more and more enthusiastic about the world of 5G the more we get into this and see what kinds of services will be consumed over the top on our mobile networks.”
For Time Warner, “joining forces” with AT&T will “accelerate the evolution of both our companies as we go where consumers are going in the converging worlds of media and communications,” said Bewkes on the call. “We need to go where consumers are going, and that’s increasingly mobile, increasingly multi-platform and it’s increasingly on-demand.” There is “huge opportunity” through the takeover to use “consumer insights to inform content creation,” he said. “We’ll be able to do that more efficiently, while also innovating very important new subscription and advertising models to increase consumer choice.”
When he and Bewkes met about the merger and both became convinced “it was the deal that ought to happen, these kind of deals -- you don’t sit around and wait for the perfect timing,” Stephenson said. “Once you have a deal structure, given the potential for leaks and so forth, the objective is to push them through and get ‘em done, and that’s exactly what we did here. So there’s never a perfect time for a deal like this.”
Stephenson thinks the timing “fits well” with AT&T’s own DirecTV “integration plans, and I also think it fits well in terms of how fast this industry is moving,” he said. The “convergence” of media and content distribution “is moving fast,” he said. “We want to be at the front of it. We don’t want to be chasing it. Doing this deal now allows us to lead this type of convergence activity and bring stuff to our customers before other people bring it to their customers.”