AT&T-Time Warner Deal Is Mostly About Defense

AT&T and Time Warner are suiting up for the Great Media Game. Their strategy to win is more about defense than offense. The strongest case for the gargantuan merger is that it is a hedge against a future where the first point of entry for a media consumer might be Netflix, Facebook, YouTube or Hulu, just as easily as a cable or telecom company. AT&T’s $50 billion acquisition of DirecTV tethered the telecom giant to a pay-TV business that has begun to decline and could be in store for serious pain if cord-cutting accelerates.

The good news for AT&T, Comcast, and others is that consumers will still need broadband subscriptions to sign up for their favorite streaming services. Now, with the Time Warner deal, there will be another hedge for AT&T: Any emerging streaming platform will need to license content from the big media conglomerates to survive. Time Warner won’t likely be left out of any aspiring “skinny” online TV bundle from Google, Amazon or Apple, or TV-like platform on social media, be it via Facebook, Snapchat or Twitter. (A side benefit: AT&T will take on Time Warner’s 10% ownership of Hulu alongside Comcast, Walt Disney and 21st Century Fox)