AT&T’s $113 billion takeover of Time Warner shows where TV is heading in the digital age
The planned takeover of Time Warner by AT&T is part of a global upheaval in the media world. (Reuters: Eric Thayer, file photo)
Former Wesfarmers boss Richard Goyder once famously said: “Amazon is going to eat all our breakfasts, lunches and dinners.”
As head of the company which owns Coles, Kmart, Target and Bunnings, Mr Goyder was echoing the fears of all bricks and mortar retailers.
Media companies have the same fears about the likes of Netflix, Google, Amazon, Twitter, and YouTube.
Netflix’s dominance of the video on demand space is well documented, and together with the other digital video providers, they’re sending free-to-air television viewing south at an increasingly rapid rate.
The scariest thought of all for free-to-air television is that one of the internet giants will acquire the rights to a major sport.
In Australia that would be AFL, NRL or cricket.
Sport is the only product that can still deliver big viewer numbers on a regular basis, as last week’s State of Origin rugby league match demonstrated.
Already, in the United States, Amazon has dipped its toe in the sports water, screening Thursday night NFL games.
Then there are telecommunications companies, increasingly looking for content for their mobile phones, which are more mobile screen than mobile phone.
It’s why Optus has paid top dollar to show English Premier League soccer, and now the World Cup, which starts on Thursday.
For the first time, most of the World Cup matches involving soccer’s heavyweights will only be available to Optus subscribers.
Scramble for content is on
Against that background the world’s biggest phone company, AT&T, has made a $113 billion takeover bid for Time Warner, the owner of CNN, HBO, and Warner Bros.
AT&T is the world’s largest telecommunications company and the second largest provider of mobile phone services in the US.
If the deal goes through, AT&T will have a massive new stream of content to sell to its 140 million customers.
The Trump administration, which is no fan of the critical coverage it receives from CNN, is opposed to the mega deal, and is trying to block it, but a judge in the US District Court has overruled that.
The White House, through the Department of Justice, has yet to indicate if it will appeal.
AT&T’s bid for Time Warner is one of three mega media deals in the offing amid a global scramble for content and size, as traditional media companies try to hold the new digital kids on the block at bay for as long as they can.
Elsewhere, Disney has offered about $88 billion for the Fox Television Network and 20th Century Fox movie studios owned by Rupert Murdoch’s 21st Century Fox group in the United States.
While fellow US media giant, Comcast, has offered $41 billion dollars for Sky TV in the United Kingdom, trumping a bid by 21st Century Fox.
Implications for Australia
So, does all this overseas media movement have any implications for Australia?
Can Australia’s commercial television networks, including Foxtel, stand up to the relentless onslaught of Netflix, YouTube, Google etc?
Revenue, profits, and viewer numbers are falling rapidly.
Their sports rights contracts, which do deliver viewers, only have a limited life.
Channel Ten is insulated for now to some extent because it’s owned by America’s CBS network.
The long-term outlook though for all the networks is bleak.
They are rich sources of content though, which in years to come could make them prime targets to be snapped up as part of the consolidation of the media/telco sectors we are seeing overseas.