• by Wayne Friedman , May 30, 2018

The rush of recent potential traditional media mergers continues to point to one key area -- now and in the future: high-level TV and movie content.

“Premium content is going to be very relevant five or six years from now,” says Randall Stephenson, chairman/CEO of AT&T, speaking at the Code Conference in Palos Verdes, California. “Premium content consumption is not going down; it’s going up.... [and] advertisers love premium content platforms.”

Stephenson was responding to a recent rush of proposed (and completed) deals, which started with his company’s effort to buy content producer Time Warner.

Since then, there have been others: Walt Disney (or Comcast)-21st Century Fox; Discovery Communications-Scripps Networks Interactive; CBS-Viacom; and T Mobile Sprint, among others.

"Vertical" media business deals -- which include distribution, content production, advertising platforms -- means "everyone is headed down the same path. A lot of bandwidth is going to be required to make that happen," he adds.

AT&T believes its pursuit to buy Time Warner for $85.4 billion will give it a step ahead in selling better advertising -- all due to its deep consumer data through its current businesses.

He says while Time Warner’s Turner networks have a large supply of TV ad inventory to sell, to date, that effort hasn’t been largely focused around a targeted advertising approach.

“AT&T has an amazing amount of data -- 40 million pay TV subscribers in North and South America, 130 million mobile subscribers, and 16 million broadband subscribers. We have really great customer insight into the shows, media and content they are viewing and where they are.

“There is going to be new business models surrounding ad-driven type models,” Stephenson says.

AT&T is waiting on a decision in the antitrust lawsuit brought by the Department of Justice to block the company's proposed $85.4 billion acquisition of Time Warner.

Competition is key. Digital media companies continue to see strong growth. Traditional TV media and communications need to respond quickly -- thus the push for big mergers, note analysts.

Stephenson points to the growth of FANG stocks: Facebook, Amazon, Netflix, Google. Since the AT&T-Time Warner deal was announced in December 2016, he says the market capitalization of FANG stocks “has gone up $1 trillion. You need to vertically integrate if you want to compete with those players.”