AT&T has agreed to acquire Time Warner in a deal worth $85 billion. That’s a lot of money! It’s also the second mega acquisition the Dallas-based telecoms giant has made in as recent years – last July, it finalized a $48.5 billion purchase of DirecTV, which it is now using to launch an over-the-top TV streaming service.
But whereas that deal was about expanding how AT&T feeds you content, this one is about taking further control of what content goes through its pipes in the first place. As chart from Statista shows, though, AT&T is paying a pretty big premium for Time Warner. Though it’s still huge, the media titan’s three major segments – Warner Bros., HBO, and Turner – brought in roughly $29 billion in revenue last year. That’s not as much! And it comes at a time where big media companies look more and more threatened by the internet.
There are other concerns beyond that, too. For one, AT&T will have to go through a heavily scrutinized dance with the federal government to get the deal approved, especially since there have been concerns over how Comcast has treated competitors after acquiring NBCUniversal in a similar deal a few years back.
Then, if it does pass, AT&T would likely have a hard time leveraging its new properties to gain a competitive advantage. Big movies and TV shows need to be everywhere to make as much money as possible, and nobody wants to be strong-armed into buying DirecTV Now or AT&T’s mobile service to watch “Game of Thrones” or CNN.
So the questions left now are: Why bother? And is it really worth this much? Right now, the respective CEOs are saying the right things, and potentially looking to the future. Maybe AT&T will tout its own “Binge On” style service that lets you stream HBO over its mobile network for free, as sketchy as that practice continues to be. Whatever the case, it remains to be seen whether or not all of this money will ever pay off.