Commentary

AT&T Revamps Time Warner, Faces Digital Challenges

AT&T’s managerial shakeup at its WarnerMedia unit marks one of the first times in recent memory that media industry job cuts aren’t happening at an embattled publisher.

Time Warner, as WarnerMedia used to be known, was finally acquired by AT&T last week after the telecom giant defeated regulatory efforts to kill the deal. But Time Warner already had spun off its magazine division in 2014 as a reborn Time Inc. amid declines in print advertising.

AT&T on Monday announced a plan to break up its Turner unit into parts that other divisions will absorb. The media giant seeks to make the company more competitive as technology and consolidation reshape the entertainment industry.

Time and its rivals in publishing were canaries in the coal mine that had forewarned the broader media industry of the need for a shakeout. Audiences were starting to abandon cable and broadcast TV in the same way they had stopped reading print publications after the internet was commercialized in the mid-1990s.

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Last year, Time Inc. felt another sting of restructuring after being acquired by Meredith Corp., publisher of Better Homes & Gardens and Ladies’ Home Journal, for $1.84 billion. Meredith held onto some of Time’s titles, such as People, while seeking to sell Time, Fortune, Money and Sports Illustrated.

The new owner cut 1,200 jobs to streamline operations and sold Time magazine to Marc Benioff, cofounder of Salesforce.com, and his wife Lynne Benioff for $190 million. Fortune was sold to Thai businessman Chatchaval Jiaravanon for $150 million, while Money and Sports Illustrated are still for sale.

AT&T and WarnerMedia aren’t out of the woods just yet, given serious competitive challenges in digital media.

The trend of cord-cutting even accelerated last year as more than 3.2 million households canceled their pay-TV subscriptions. Viewers are signing up for streaming services, “skinny bundles” like YouTube TV or spending time on their smartphones.

The rollout of high-speed 5G mobile networks will make watching video on a smartphone even less cumbersome, and AT&T is likely to bundle more programming into its cellular plans to compete rivals Verizon and a possibly merged Sprint and T-Mobile.

I haven't cut the cord from my Verizon FiOS pay-TV subscription because I need to keep an eye on news and entertainment for my job. Aside from the cost of a broadband connection and landline phone, the cable programming portion of my bill adds up to more than $1,500 a year.

If not for professional need, I would likely try to save a few bucks by canceling channels such as CNN, MSNBC, Fox News, CNBC, ESPN and any channel taking up broadband with sports programming that no one in my household watches. (FiOS already saved its subscribers from the trouble of canceling Bloomberg.)

I’ve tried to do my patriotic duty of teaching my teenage kids about football and baseball, but they can’t stand watching sports because they’re “too boring” compared with Snapchat, Instagram and YouTube.

Media executives should worry about these trends among younger audiences, which spend time consuming content, but not necessarily from traditional channels, like print, TV and radio.

2 comments about "AT&T Revamps Time Warner, Faces Digital Challenges".
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  1. James Smith from J. R. Smith Group, March 6, 2019 at 9:43 a.m.

    Rob: That $1,500 is a heavy toll to pay mostly for channels you don't watch.  You and millions of other Americans.  Does the term ala-carte come to mind? 

    Seems like most industry leaders and regulators have forgotten about the 1948 Paramount anti-trust case. Here's a link to a quick summary, free...from one of the nets you are probably paying for.  

    https://www.history.com/this-day-in-history/u-s-supreme-court-decides-paramount-antitrust-case

  2. Robert Williams from Mediapost, March 6, 2019 at 11:34 a.m.

    Thanks for the comment!

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