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Content is Key to Future Success: AT&T

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Does a TV system need its own programming to compete successfully? AT&T evidently thinks so.

John Stankey, the CEO of the AT&T Entertainment Group, says it’s not enough to own the infrastructure that carries video entertainment. His company wants to produce and own much of the content carried on it. Speaking to the Mobile World Congress in Barcelona on Monday, Stankey said, “We just cannot envision a future where AT&T is relevant if we don’t directly participate in some of the water flowing through our pipes.”

Is This Why AT&T Bought Time Warner?

Stankey ‘s statement may explain his company’s recent buyout of Time Warner, Inc. TWI owns HBO, the Turner Broadcasting System, Warner Brothers Entertainment, the CNN News Group, and a wide variety of international channels. The merger was an apparent attempt at vertical market control, like Comcast’s 2011 purchase of NBC Universal. If AT&T controls both distribution and content, it will be a tough competitor.

The merger is not universally popular. Both AT&T and Time Warner have attempted to mollify U.S. Senators who’ve said that the combined company could more easily deny popular Time Warner channels to other TV systems, or to charge higher licensing fees.

Who Benefits, and How?

To address these concerns, the AT&T and Time Warner CEOs wrote a joint letter arguing that the merger will foster more market competition and will benefit consumers. The letter stated, “AT&T and Time Warner have both encountered such friction as they have sought to bring innovations to market. That friction has kept consumers from getting the full suite of innovative features that they want.”

Both companies said that consumers will benefit from their merger in the following ways:

  • interactive and personalized viewing of live events, including sports
  • Short-form content produced specifically for viewing on mobile devices
  • More relevant (targeted) advertising on video platforms
  • Enabling of custom content created by consumers, combined with professionally produced content and shared on social media
  • Professionally produced content compatible with virtual reality and augmented reality platforms
  • Expanded consumer choice, convenience, and value in content bundles

(Editor’s Note: Time Warner, Inc. is not Time Warner Cable. They have not been under the same corporate umbrella since 2009, when AOL Time Warner spun off Time Warner, Inc. and AOL. Charter Communication bought TWC last year.)

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