The deal will officially go through in late 2017 — as long as the US government lets that happen. Federal regulators blocked AT&T CEO Randall Stephenson’s $39 billion purchase of T-Mobile five years ago, so he probably isn’t popping bottles just yet. As the Verge notes, “the FCC has not defined net neutrality on mobile to the degree it has on wired broadband. This merger, should it pass, will almost certainly force that agency to take a deeper look at how it wants to regulate the marriage of mobile network operators and media companies they manage.”
WHY AT&T WANTED TO DO IT
If the FCC gives AT&T a break this time, the company will be even deeper into the streaming game. Stephenson already ventured into this realm with his recent $49 billion acquisition of Direct TV. The Dallas telecom giant was already preparing to launch a streaming service called DirectTV Now before the Time Warner deal, and buying the company with the rights to HBO, CNN, Warner Brothers, TNT and other platforms enhances the quality of content that AT&T can distribute to the 315 million people that it covers in the US.
“If you were ever going to do something like this, this is the content you’d like to use as an anchor tenant,” Stephenson said. “Premium content always wins. It has been true on the big screen, the TV screen and now it is proving true on the mobile screen.”
WHY TIME WARNER WANTED TO DO IT
First, the deal is a major boon for Time Warner CEO Jeff Bewkes. Two years ago, 21st Century Fox offered to buy Time Warner for $85 per share and Bewkes walked away, saying that was an undervaluation of his company. Apparently he was right. Bewkes has also focused much of his Time Warner tenure on getting out of the distribution business and focusing content. The company used to own Time Inc. magazines and merged with AOL, but Bewkes thought that wasn’t the best place to invest Time Warner’s time and money. He beefed up the content and got out of those partnerships, and now AT&T decided that it wanted to distribute that content too over 300 million people, making for another feather in Bewkes’ cap.
WHY THIS MIGHT BENEFIT CONSUMERS
For one, AT&T’s scale could allow for one of, if not the, cheaper streaming services out there. Sling TV costs $20 a month, and you barely get basic cable for that, and the difference between a internet/TV and just-internet package might not even be $20 anyway. But now, as the Verge‘s Ben Popper wrote, younger consumers that want more than just the network channels and ESPN can get more in a quality bundle. “That would mean that instead of paying $14.99 a month for HBO Now or about $16 a month for NBA League Pass, they might get HBO, basketball from TNT, news from CNN, and a library of films from Warner Bros. for a single monthly fee,” Popper posits. And of course, if your phone as AT&T, you can stream all that from wherever.
WHY THIS COULD BE BAD FOR CONSUMERS
Well, if you don’t have an AT&T phone and but you don’t want to pay the sticker price, or even if you do want to pay sticker price, for HBO or NBA League Pass (which is part of Turner, which Time Warner owns). For instance, if you have Verizon, you can watch the NFL for free on your phone. If you don’t, too bad, even if you have FiOS at your house.
This could conceivably happen with all Time Warner’s content, and that could cause major first world problems. Also, such exclusivity and scale could stifle new entries into the steaming marketplace, as Netflix and Verizon would probably feel they need to match AT&T with some acquisitions of their own, and then there would be little market share for anyone else.