AT&T, Time Warner want to out-innovate cable

AT&T’s proposed $85 billion takeover of Time Warner will, in part, help the combined companies push video distribution innovation that may have been slowed by cable companies. Time Warner CEO Jeff Bewkes said various cable companies and other distributors “took a long time” to create direct-to-consumer video on demand (VOD) offerings across all networks because negotiations between various pay-TV providers and network groups held up the process. “We’ve been trying at Time Warner to get more video-on-demand on, not just our networks, but have it become a universal thing for every American. You go to your set-top or television and that whole dial of networks, hundreds of channels, they should all be VOD just like HBO and Netflix,” said Bewkes. Bewkes said AT&T, which he called the largest and best at mobile delivery, will help drive more choices and different price points of video distribution for different consumers.

Of course, right now, two of the best examples of that kind of video distribution innovation is AT&T’s upcoming virtual MVPD DirecTV Now – which AT&T CEO Randall Stephenson today said would officially launch in November – and HBO Now, one of the most successful early direct-to-consumer video services. BTIG analyst Rich Greenfield said that HBO Now is likely one of the key assets driving AT&T to the deal with Time Warner. “AT&T is not buying Time Warner for its basic cable networks. AT&T is buying Time Warner to get at its content creation engines Warner Bros. and HBO, with HBO one of the only legacy media assets to establish a direct-to-consumer business (HBO Now),” wrote Greenfield in a research note.