At&T, the telecom giant based in Dallas, Texas, made an unbelievable bid of approximately $85bn to acquire one of the biggest media and entertainment conglomerates in the world. This is not the first time AT&T has acquired big, given its past purchase of DirecTV for a mammoth amount of $48.5bn with undisclosed clauses.
Time Warner’s Market Situation
To be accurate, $85.4bn is the value including both cash and stock. While this comes as a boon for the telecom and media world, it also comes as a comprehensive bane for its customers.
Time Warner has a successful list of channels: HBO, CNN, TBS. But the question arises: if Time Warner is doing so well in the business of media, why was it sold? The answer lies in its shifting customer base from one digital media to another. The cable networks are usually being cut loose, and this “on-the-go” generation mostly prefers to watch their favourite TV shows, movies and news on their personal devices.
The Effects Of The Merger
The positive side of this merger is that it will enhance the power of the digital world and it will reshape the world of telecommunications and media. Time Warner will able to reach its customers on all their devices. This might increase competition among cable companies, as Time Warner will not primarily focus on that. Along with AT&T, it can attract the viewers with captivating subscription packages which in turn might lead them to a huge profit. This means the advertising sector for AT&T will be one of the most effective sectors in the end.
While this has its massive advantages, there are some serious issues which can deliberately lead to a massive loss. This is not the first time Time Warner has merged with a high-flying giant. The merger between Time Warner and AOL was dismantled by both the former and the latter as things did not turn out the way they were supposed to, leading to an unprecedented break-up of the partnership.
As some say, it is counted as one of the worst mergers of all times. There is a huge chance that the AT&T merger could go down the same way.
This merger might focus towards target advertising and it could mean a solidarity towards our advertisement experiences. Since the launch of addressable TV advertising with the help of DirecTV, AT&T can extend these services across their new platforms.
There are positive ways to look at this gigantic merger, but the negative impact which might occur in the future because of it should not be ignored. This deal will help both the companies move forward faster, which is better in this market as people tend to shift towards their personal devices rather than a cable service.