AT&T CEO Randall Stephenson continued to campaign for his $84.7 billion Time Warner acquisition today with a memo to his company’s officers that offers what he calls “the ‘Magna Carta’ of our merger.”
The document seems tailored to address potential concerns Justice Department antitrust officials might have about the union of the No. 1 TV distributor and No. 2 wireless company with Time Warner’s cable channels (including CNN, TNT, TBS, and HBO) and Warner Bros.
The deal is designed to “get the most content to the most people at the lowest prices, delivered on any screen, particularly mobile,” Stephenson says. “We are convinced that this merger will change the game in video by bringing innovation and investment to a media industry that is begging for both and to consumers who want a better video experience.”
He reiterated his promise to “not do anything to change” CNN’s editorial independence, which he says is “what makes CNN so popular and so valuable.”
Stephenson promised consumers “skinnier bundles, video created just for mobile viewing and social media, and low-cost video products supported by advertisers instead of consumers. More choice; lower cost.”
And he told cable operators to “Watch out. We aim for nothing less than competing with you head-to-head throughout the country on cost, quality, and choice.” He hopes to “give the entire wireless industry confidence to deploy ultra-fast 5G technology more aggressively, bringing ‘new pipes’ and new choices into consumers’ homes across the country.”
But Consumer Federation of America Director of Research Mark Cooper doesn’t buy the argument.
The longtime analyst of media mega mergers says AT&T’s deal highlights the fact that a “tight oligopoly on steroids has emerged in the sector that rejecting or conditioning mergers cannot address.”
A handful of phone companies “ruthlessly exploit their market power to undermine competition…cross subsidize their more competitive businesses, like mobile…and overcharge their business customers,” he adds. Adding Time Warner to AT&T “will give it another tool and reason to abuse its market power.”
Here’s Stephenson’s memo:
To All Officers:
I could not be more excited about our announced combination of AT&T and Time Warner. We entered this transaction for many reasons, but those reasons all boil down to one thing – we want to get the most content to the most people at the lowest prices, delivered on any screen, particularly mobile. We are convinced that this merger will change the game in video by bringing innovation and investment to a media industry that is begging for both and to consumers who want a better video experience.
To make this happen, we will need to be smart, nimble, and creative in how we manage our business and empower our people. To that end, below are the core, bedrock principles for how we plan to go to market as a single company after close. I have begun sharing these principles externally, so I wanted to share them with you as well. From a competitive standpoint, I consider this the “Magna Carta” of our merger.
1. To AT&T employees: We will continue to purchase high-quality content from all corners of the content community. In fact, as we develop new packages and offerings for mobile and social, our content purchasing needs outside of Time Warner will only increase.
2. To Time Warner employees: We will continue to distribute Time Warner content broadly across the industry. In fact, we want to extend its distribution deeper into mobile so all wireless companies become distribution points for Time Warner content.
3. To CNN: We are committed to continuing the editorial independence of CNN. Independence is what makes CNN so popular and so valuable. We will not do anything to change that.
4. To Other Content Companies: We will use Time Warner content as a “launching pad” for new, mobile-first packages that better meet consumer demand. We think Time Warner will help us persuade you and other providers to join these offerings. And when we innovate, we think others in the industry will innovate and experiment as well.
5. To Consumers: We know you want more than what the industry is giving you today. That’s why we are launching DirecTV Now, our 100+ channel, 100% over-the-top product that is aggressively priced with packages beginning at $35 a month. Looking ahead, we will use our digital rights in Time Warner’s content to create new choices – skinnier bundles, video created just for mobile viewing and social media, and low-cost video products supported by advertisers instead of consumers. More choice; lower cost.
6. To Cable: Watch out. We aim for nothing less than competing with you head-to-head throughout the country on cost, quality, and choice. Our acquisition of DIRECTV is already helping us deploy fiber to 12.5 million U.S. homes. Now, if we can ignite the next revolution in mobile video, it will give the entire wireless industry confidence to deploy ultra-fast 5G technology more aggressively, bringing “new pipes” and new choices into consumers’ homes across the country.