Dive Brief:
- AT&T and Time Warner executives have recently conferred about ways they might work together, including a possible merger, Bloomberg reports, citing people familiar with the matter. UPDATE: Bloomberg said today that the timeline on a potential acquisition has accelerated since the initial report was released and could be announced as soon as Monday.
- While nothing is formal at this stage, the news comes at a time when AT&T is looking to transform itself into a media and entertainment leader.
- The telecommunications company is concurrently working on developing an internet-based DirecTV offering following its acquisition of the satellite TV provider last year for $48.5 billion, per Bloomberg.
Dive Insight:
AT&T and Verizon are both trying to position themselves for the future as the smartphone market matures and data revenues flatten.
The report of a possible deal with Time Warner points to how AT&T is betting on growth in digital content consumption. An earlier report from Bloomberg said AT&T has a three-to-five year plan to acquire media and entertainment companies worth between $2 billion and $50 billion.
A deal for Time Warner would give AT&T’s aspirations a big boost given the entertainment company is one of the biggest providers of TV, wireless and home Internet services and owns popular programming with HBO and the Cartoon Network. However, developing content is very different from distributing it and AT&T could find the transition difficult.
The content push could boost AT&T’s digital advertising strategy, an area where telecommunications companies were once expected to be leaders but have been eclipsed by tech giants like Facebook, Google and others. For example, AT&T has been pursuing a strategy of giving advertisers a way to sponsor the data required to watch a movie on a mobile device. Owning content could help AT&T expand this program.
Verizon is also seeking a profitable way forward and is focusing more directly on marketing and advertising services, something that is evident from its acquisition of AOL and its pending deal for Yahoo.
These developments are part of a bigger race toward digital video content, with Google reportedly signing a content deal with CBS for a web TV service scheduled to launch early next year.
