With the notable exception of Twenty First Century Fox (FOX), traditional U.S. media & broadcasting companies have been in a real funk this past year. The same goes for US telecom companies. But, Tuesday’s approval of the landmark ATT/Time Warner deal could be a game changer. It paves the way for similar synergistic transactions, and a reinvention of business models for both industries.
On Tuesday, AT&T won approval for its $80bn takeover of Time Warner, as a federal judge rejected the US government’s argument that it would harm competition. Further, the decision was handed down with no conditions, paving the way for more similar transactions in the telecoms and cable sectors, and revolutionizing digital content. MRP recently highlighted how large pay-TV providers are rapidly losing subscribers as 3.4 million households have ditched cable since 2012, many of them opting to go digital with streaming services. Although AT&T is the largest pay-TV provider in the US, it lacks a digital platform and content, the power commodities of the digital age. Exponential growth of mobile data usage has shifted consumer preference from cable TV connections to low-cost video streaming services. AT&T’s incentive is to use Time Warner-owned channels like HBO and CNN to attract more users on every platform. Other mega deals have been waiting in the wings for this decision, and the M&A floodgates may be prepared to open . . .