The business still bears the scars of a deal described by one of the bankers involved as “like trying to mate a horse with a dog,” which left both sides lashing out and preventing each other from doing potentially beneficial deals with other providers.
Under chief executive Jeff Bewkes, Time Warner has since shed AOL, Cable, Warner Music and the publisher Time Inc., while its shares have more than tripled.
“We’ve spent a long time getting our company down to a nimble, focused, must-have group of capabilities that we think is very well suited to all these evolutions,” said Bewkes in an interview this summer, shortly before the AT&T talks began.
Time Warner Bids
If anything, the clean-up went too well with some analysts questioning this year whether a firm that was planning a $5 billion share buyback had run out of new ways to invest. The slimmed-down Time Warner became the target of takeover interest two years ago from Rupert Murdoch’s 20th Century Fox, which tabled an $80 billion bid, but bosses said the firm was worth more.
AT&T apparently agreed. Executives at the firm regularly talk to their compatriots at Time Warner, not unusual in an industry in flux. But the discussions rapidly evolved into the idea of a mega-takeover in August. “We have a very common view of the world,” said AT&T chief Randall Stephenson. “This thing just had what we called gravity.”
AT&T believes one of the benefits of buying Time Warner is that it brings in products that were relatively cheap to produce and can be made with relatively low regulatory interference – at least compared to building telecoms networks. Time Warner’s stake in the video streaming service, Hulu, which it acquired in August, will also give the group a way to tap into online viewers.
“There will always be big-screen TVs in our homes, but mobile video is what our customers are demanding. Only AT&T will have the world’s best premium content with the networks to deliver it to every screen,” said AT&T’s Stephenson. Yeah, sure.
Media mergers like this can be lengthy and confusing. Having a single business control what a customer sees, from the start of filming to the broadband connection delivering the stream, could make regulators (and citizens) particularly nervous.
Presidential candidate Donald Trump has already said he would block the merger if elected. The Federal Communications Commission and the U.S. Department of Justice could require other like-minded opinions before they give their approval.
That is some way off – the deal is also subject to the concerns of shareholders from both sides. Some of them still remember the last time Time Warner took part in a mega-deal.
“#dejavu” tweeted former AOL chief Steve Case after the deal was announced. He isn’t wrong.
Why Should The Big Bang Theory Fans Care?
The Big Bang Theory is a huge cash cow. So, as far as the show continuing, probably not an issue. But Time Warner is the company that produces the hit show, and it seems that by merging with AT&T they want to control more of what the consumer sees.
So, if you watch The Big Bang Theory online, you’ll probably be angry with all the mind-numbing ads prompting you to buy things. We already get it on television, so why not everything else?
I guess this is Time Warner’s way of licking the AOL wounds.