AT&T CEO Randall Stephenson said his company’s proposed vertical merger with Time Warner will be key to it competing with newer media giants like Amazon and Netflix.
Speaking with CNBC, he said concerns about AT&T/Time Warner having too much control over content creation and distribution lose some merit in light of what companies like Amazon and Netflix have been able to do.
“There’s this concern about vertical integration, having everything from content creation, content aggregation to content distribution,” Stephenson told CNBC. “Reality is, the biggest distributor of content out there is totally vertically integrated. This happens to be somebody called Netflix. They create original content, they aggregate original content and they distribute original content. They have 100 million subscribers. Look at Amazon; they’re doing the exact same thing.”
He added Google and Hulu to the list of companies that are also creating, aggregating and distributing content. By comparison, he said AT&T has about 25 million video subscribers.
Of course, a combined AT&T/Time Warner would not just be distributing content to customers, but it would also own and control many of the networks that are used for distribution of that content.
Regardless of how the AT&T/Time Warner combination looks in the court of public opinion, it will still need to pass muster in actual court. In about one month on March 19, trial is set to begin for the U.S. Justice Department’s formal move to block the merger.
Earlier this month during his company’s earnings call, Stephenson said that AT&T is preparing for court and is confident precedent will be on its side.
“We were obviously surprised when the government decided to try to block the merger because it is a classic vertical merger between two companies that don’t even compete with one another. With 50 years of legal precedent, this is the type of business combination that the government has consistently approved with appropriate conditions. While we remain open to finding some reasonable solutions to address the government’s concerns, we do expect this case will ultimately be litigated in court … and we remain very confident that we’ll complete this merger,” said Stephenson.