AT&T/Time Warner

It's a game of musical chairs.

AT&T is not looking to win so much as to SURVIVE!

Just think about it, Time used to be a colossus, Warner too. The latter was early into cable, its music division fed the growth and now both are indie entities today, long gone. While the CEOs were going for shareholder value, they sealed their future, one in which standalone companies cannot survive.

The last twenty years have been about disruption.

Now we've entered the era of consolidation.

The harbinger was Facebook's acquisition of WhatsApp. Not only did it have the billions to pay for it, it was a flanking move, to ensure that the social network was not eclipsed in the future. The four behemoths are doing this ad infinitum now, that's right, Google, Apple, Facebook and Amazon rule the tech sphere today. Can anybody compete, can anybody win?

Just ask Diapers.com, which was squeezed into selling to Amazon. Zappos too. And if Amazon wanted to own music streaming it could do that as well, by buying Spotify or potentially lowering prices. The power of these winners is far beyond that of their competitors. Actually, the goal of today's startups is to sell out. Sure, Snap may be independent, but there are always outliers.

So what do we learn?

There will be less.

This is the honking headline. When even Lady Gaga can't win you know that the middle and lower classes of art have no chance. There might be 400 scripted series today, but there will be many fewer tomorrow. We're going to gravitate to the big winners. And someone has to fund the production, and outlets don't want to bleed endless cash, right now they're doing it for the market share, in a world where distribution rules.

That's the story here. How he with the pipes is in control. We used to think distributors were dumb, an afterthought, just like concert promoters were the ass end of the business, funny how things turn around.

Concert promoters won because recordings nosedived and the live experience became everything in a cold, digital world.

Distributors are winning because they're the ones who reach out and touch consumers. They're the last mile. No matter how good something is, if it's not up front and center for the consumer, if it's not available, it will fail.

Verizon is busy building an advertising platform. Investment is low, but the play is too conservative, peopled by also-rans.

AT&T is making a big bet, paid for by debt. But AT&T wants to beat not only Verizon, but Comcast-NBC/Universal.

And T-Mobile is gaining customers via low prices, but that just makes it a target, you don't think T-Mobile is gonna remain independent, do you?

Is this bad for consumers?

Well, let's start with antitrust. AT&T and Time Warner did not make this deal willy-nilly, they consulted with attorneys. And the truth is...it feels anti-competitive but there's a strong argument it is not. After all, AT&T does not dominate mobile, and the aforementioned T-Mobile is making inroads, and Time Warner does not dominate television. So, it looks like with some small divestitures and conditions this passes.

Then what?

Then you've got a world where there are three record labels instead of six, fewer places to sell your wares. And despite all the indie hoo-hah you need the major to promote your project, to get the word out, the major has relationships with radio and media and...

What's next, is the "New York Times" part of a bigger operation?

The "Times" blew distribution. It owned the doorstep and is losing ground online. That's a formula for death. And the "Times" is one of the winners. When competition ramps up you don't cut, try to balance the budget, you invest, as AT&T is doing here.

This is what happens when you reach maturity. Not only is television mature, the internet is too. We haven't seen any radical innovation since Uber. Now it's all about business moves.

So, you don't have to watch your shows on HBO. There are numerous alternatives, Showtime and Starz, also owned by bigger entities. But you do have to watch something. And chances are, despite the low barrier to entry online, you're gonna watch the offerings of the big kahunas. You get lost by yourself online. You can't gain traction, there's just too much noise.

Philippe Dauman put a stake in the heart of Viacom by worrying about stock price, with worthless buybacks and an endless talent drain. In today's world you don't balance the books, you invest, and Wall Street will steer you wrong. How did Amazon become such a behemoth? By spending! Worrying about tomorrow!

This is not AOL/Time Warner. This is not a dream. This is not about a future we cannot understand. And it's less about synergy than survival. He who does not grow and become the platform of choice will be eaten up tomorrow.

It's the way of the world.


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