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AT&T’s top priority is “getting the Time Warner deal done,” chairman and CEO Randall Stephenson said Tuesday, adding that “we spend most of our waking hours” on that.
Speaking at the 45th Annual J.P. Morgan Global Technology, Media and Telecom Conference in Boston, he said: “Time Warner changes the game. We now have the ability, and we are actually putting in place plans now, to begin curating Time Warner content uniquely for a mobile environment. You can think of all the great franchises in Time Warner and what we will be able to do, and we are now working to stand up [advertising-based models].”
The telecom giant late last year agreed to acquire Time Warner for $85.4 billion, and the CEO on Tuesday was questioned about the possible benefits of combining content and distribution businesses, including some critics’ concerns that AT&T could keep popular Time Warner networks or content away from rivals and offer them exclusively on its own platforms.
Stephenson said that after the deal nothing would change about trying to get out content, such as HBO’s or CNN’s, to as many people as possible. “You create value in a media/entertainment with broad, deep distribution,” he said, adding that “you want HBO on every device on every device.” And he emphasized: “You can’t think about taking [HBO’s] Game of Thrones, and you only are going to make it available to AT&T customers, that’s crazy – you’d destroy the value of the media/entertainment business.”
He highlighted, though, that the combined company could decide to “do things…uniquely with Game of Thrones for your mobile environment…and if you get this right…you probably will want to make this available later to other providers as well.”
Stephenson cited Game of Thrones again as an example. “I’ll cause [CEO Richard] Plepler at HBO to panic,” he said, suggesting that the traditional 60-minute episodes may not be the best experience on mobile devices. Instead, “maybe you want a 20-minute episode,” he suggested. “Let the content geniuses and creative geniuses think about this, but curate the content uniquely for a mobile environment.”
“We actually think there’s an opportunity to accelerate the HBO platform in the mobile environment,” he added. “There are so many opportunities to drive value,” including curating content in new ways to make it “more conducive to consumption in a mobile environment.”
Stephenson also suggested mobile news feeds from Time Warner’s CNN as possible new offers that could make sense to launch.
Highlighting other potential synergies, the AT&T head said DC Comics, Harry Potter and other Time Warner franchises could be cross-promoted via retail stores and pay TV. “Those are just big areas where we are convinced there will be some early payoffs and opportunities to create value in the media company,” he said.
The other way around, Time Warner content could help improve customer retention and average revenue per subscriber.
Stephenson also said that using DirecTV Now and going direct-to-consumers, the company could take Warner Bros.’ “massive library” and put advertising-supported models around that content.
Improving advertising yields at Time Warner’s Turner cable networks is another area of upside, according to the AT&T boss. He said Turner has 750 billion-plus impressions a year, with AT&T’s DirecTV and mobile platforms adding another 150-200 billion a year. But he said there is a higher yield at AT&T/DirecTV because of its very targeted advertising and data. That means it has two to three times higher revenue per ad impression than traditional media companies, meaning the combination should drive yield up “significantly” at Turner.
The Justice Department is reviewing the Time Warner deal. During the election campaign, then Republican candidate Donald Trump spoke out against the transaction. Stephenson previously said: “I’ve had two conversations with President Trump and his administration. In neither one of those conversations was there any discussion about this deal.” The companies have said they expect to close the deal by year’s end.
Stephenson also said Tuesday that premium entertainment was the core focus for AT&T these days. “The launching pad…was the DirecTV deal,” he said, citing its 25 million premium TV subscribers. “It gave us a platform to go out and negotiate rights.” And then the company decided to “go the full distance and just own a position in premium content” by buying Time Warner, because “not owning it limits what you can do.”
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Jamie Lee Curtis