Teenage kicks: AT&T, Time Warner, and quantum physics

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Duncan McKean - I'm Head of Media Technology at CCgroup. In my spare time, I'm an RNLI crew volunteer, armchair revolutionary, and real ale, music, and Arsenal FC nut.
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Unlike my teenage counterparts who were hanging out in common rooms, dirty gig venues, cheap bars and occasionally lecture theatres, my later teenage years were misspent hanging around in the nuclear physics department at Oxford University (to be fair, I was a member of staff).

It was there that I accidentally learned the basics of quantum physics, including something called the “Observer effect”. This states that the act of observation will have an effect on the thing you’re observing, and thus the thing you’re trying to measure won’t be a true and accurate measure of its state or condition.

A bit like AT&T and Time Warner, then. Hang on and I’ll explain…

They say the secret of good comedy is timing, and so it is now apparent that I’m just not that funny; in an article I wrote last week for TVB Europe, I pondered how telecoms companies could possibly compete with broadcast service providers, who are increasingly delivering their content using the pipes and highways that the telcos very thoughtfully laid. Telcos lose out because while they have the pipes, they don’t really have the content.

And then on Sunday we learn that telecoms behemoth AT&T is on the brink of acquiring Time Warner for a staggering $86 billion. As well as the pipes, it will soon have the content too. That means I need to offer some sort of adjustment or correction to my piece, and it goes something like this:

Telcos: watch out, broadcasters are going to eat your lunch’ …unless you’re a multi-billion dollar telecoms firm that can snap up multi-billion dollar media and entertainment firms.

So why the “Observer effect?” My original proclamation was, more or less, that telecoms firms couldn’t beat the media guys. Turns out they can – in this instance. But here’s the question – is AT&T now a telecoms company with media properties, or a media and entertainment company with digital delivery capabilities? Is Schrodinger’s cat dead or alive? Does it even matter?

Well yes, I think it does. Let’s face it, there aren’t many of these kinds of companies around. Liberty Global, for instance, says it is “the largest international TV and broadband company serving 29 million customers”. Its revenues are around $18bn – about an eighth of AT&T’s $147bn. OK, so Verizon is much closer at around $132bn. But accepting China Unicom and NTT (both $100bn+), after Verizon, telecoms firms drop into the sub $50bn bracket. Even the largest media and entertainment firms register around the same range (right down to single billion-dollar figures).

The point is that deals like AT&T-Time Warner are not that easy to pull off. Sure, there will always be some smaller deals between smaller players – even a $40bn telecoms provider is big enough to acquire a $5bn media firm, and we saw recently that BT was planning to acquire YouView for £60m – but I think it’ll be a long time before we see another mega media acquisition on the AT&T/TW scale. What would be more interesting, though, and much more in line with the media world’s charge into expanding delivery channels, would be a media and content firm’s acquisition of a telecoms provider… We watch and wait.

In the meantime, the final point in my earlier article still stands: “The operators and broadcasters that will eventually win will be those that are able to make the right choices about which technologies, content or services to buy in or outsource, and which they choose to build and run themselves.” And thus, the technology vendors and service providers that support them will have to rely heavily on strategic broadcast PR and telecoms PR campaigns that help them stand out.

To help with this, we conducted some research looks at the factors that influence the longlisting, shortlisting and purchasing process that broadcast service providers consider when choosing technology partners. The findings are available via our ‘Successfully marketing and selling to broadcast service providers’ whitepaper, which is free to download.  

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