The Motion Picture Business, Mobile Devices and Big Data: Or Why Time Warner Just Allowed Itself To Be Sold To AT&T


Why did Time Warner agree to AT&T's blockbuster $84.5 billion takeover?

Time Warner (which had spun off their own cable system in 2009 and now includes prized content-creators HBO; Warner Bros. movie studios; and cable channels like CNN, TNT, Turner Sports and TBS) could have resisted the offer from AT&T. 

But it seems that Time Warner's CEO Jeff Bewkes recognized that access to consumers - and, more specifically, access to the data about consumers - really really really matters.

The stuff our smartphones know about us is what allows 21st century media companies ("the disruptors?") to provide customized and personalized experiences while improving their ability to market all sorts of things to us on our mobile devices. 

HBO and Warners are great brands - rich in must-see content. But, going forward, traditional subscription TV and movies for theaters - may not be enough. The bedrock of motion picture industry success in the coming years is not (it seems) simply built on years of experience making great content. Instead the AT&T Time Warner deal now suggests that the 21st century motion picture business rests on the ability to get motion pictures in front of exactly the people who want to see it exactly when they want to see it.

And cable TV channels (even including forays into online delivery like HBO NOW) are just not big enough on their own to compete with companies like AT&T or even Netflix.

In other words, legacy media companies that don't have a massive two-way pipeline to capture information about users on mobile platforms and vast amounts of specialized content to serve them are facing a real competitive disadvantage. 

There are many reasons why a legacy movie company and subscription TV powerhouse are being swallowed by a phone company right now - but "big data" may be one key reason that the paradigm for the "distribution" of motion pictures (including legacy film and TV) is changing.

I suspect that's why Jeff Bewkes and his team acted now. 

They agreed to sell their gem of  company because that sale right now made the most sense for shareholder value.

The alternatives?

Going on as before without a strong mobile platform of their own?

Or waiting for a better offer?

But with only 800,000 subscribers (as reported by Forbes in early 2016), HBO NOW couldn't keep up with Netflix

Could Time Warner ever attract a better price? 

Perhaps?

But realistically, how much more would HBO or Warner Brothers be worth next year? 

Don't get me wrong. Must-see content will remain at the center of any motion picture company. But the precious data - about what the consumers want and when they want it - is increasingly important.

Here's how the Time Warner AT&T deal looks from AT&T's side, as explained by Richard Greenfield in an Oct 22nd, 2016 post to btigresearch.com: "AT&T is buying Time Warner to get at its content creation engines Warner Bros and HBO, with HBO one of the only legacy media assets to establish a direct-to-consumer business (HBO Now).  Time Warner refused to separate Turner from HBO and Warner Bros (link), and they appear to have found a buyer in AT&T who is willing to buy the whole thing to get at what they really want (HBO/Warner Bros) and use Turner as a cash machine (akin to their acquisition of DirecTV)... If Time Warner and its management team were confident in the future of the media sector, particularly the cable network industry, they would not be selling now. The harsh reality is that the legacy cable network business has been overearning for decades with an unvirtuous circle of pain about to begin..."

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