The proposed tie up of AT&T and Time Warner, has ruffled some media experts but the move is undoubtedly a logical one from a telecommunications firm looking to swell its data and advertising capabilities.
AT&T has got a lot to gain from the deal. The addition of Time Warner’s slate of cable networks including HBO and CNN significantly enhances its ability to construct compelling packages of content for its streaming wireless app DirecTV.
It paves the way for what Time Warner's chief executive Jeff Bawkes told analysts on a press call will be "more innovation in advertising where the ads will become more effective and of interest to you in one house versus someone else in a different house".
It's a reference to the lucrative but complicated aim of building person-centric data across TV, mobile and broadband media usage.
Jim Nail, an analyst at Forrester, believes this could lead to a seismic shift in advertising toward more individually addressable viewing. He suggested that with the new deal AT&T could be the one to open up the network owned linear TV inventory for addressability.
What’s more, Time Warner’s ownership of Warner Bros, which consists of television, feature film, home video and videogame production and distribution, could create even more inventory to monetise, and as such is viewed as a "crown-jewel" media asset with no controlling shareholders, says John H. Butler, senior analyst at Bloomberg Intelligence.
A year of uncertainty in the face of politics
Much like the Comcast-NBCU deal that was passed in 2011 subject to conditions imposed by the Justice Department, the AT&T-Time Warner combination faces “a year or more of uncertainty” while the Justice Department does its work, says Alice Enders, head of research at Enders Analysis.
Unlike the Comcast-NBCU deal, this one is being negotiated in the last two weeks of an election where presidential candidate Donald Trump has villainized the media for providing unfavourable coverage on his campaign. CNN is a particular target of the candidate, who tweeted in April that the network "will soon be the least trusted name in news if they continue to be the press shop for Hillary Clinton".
Presidential candidate Donald Trump has said the deal puts too much concentration of power in the hands of too few, even though it is between a telco and an entertainment company. Should he win the election on 8 November, he has asserted the deal "will not be approved in my administration".
"In this election year, any deal that involves a media asset, whatever its rationale, is bound to be hijacked by candidates for short-term political gain," says Enders.
"The central issue for regulators resides more in ensuring that Time Warner channels and premium pay-TV content (HBO) remain available to distributors other than AT&T."
The deal has received a unfavourable reception from critics who warn of a domino effect should the big media companies seek to become bigger, bringing antitrust issues to a head.
While it is unlikely behemoths like Disney, Fox, Comcast and Apple, which all have interests in acquisitions ranging from Twitter to Vice, will be quick to react as a result of the acquisition, the longterm prospect of the industry looks murky.
Earlier this year, Vice founder Shane Smith, a company which is not immune to new media consolidation after making a strategic deal with Disney, predicted the gloomy future of an industry owned by less people with more money: “What we’re seeing is a consolidation of mainstream media and if it keeps on going (which it will), the big five will soon be the big three and maybe if Viacom continues its dramatic implosion, maybe it’s even the big two.”
Forrester's analust affirmed this isn't the consolidation of media, rather it is the consolidation of content and distribution. But the difference between this and other content/distribution deals, which include Disney and ABC, Comcast and NBCUniversal, is that this is "traditional" content and "digital" distribution, Nail said. As such, the opportunities are more diverse.