Name: Why the AT&T-Time Warner Deal Is Bad for Networks
Uploaded: 2019-12-17
Duration: 2 min 29 s
Description: It kills their leverage

[MUSIC PLAYING] ANDREW NUSCA: Welcome to Fortune Tech Debate where we debate the issues of the day in under two minutes. Today's issue, the AT&T-Time Warner deal. All right. Two minutes on the clock. Go. ERIN GRIFFITH: All right. I think this is a good deal. ANDREW NUSCA: No, it's terrible deal. ERIN GRIFFITH: I know that you disagree. But listen, $85 billion is a huge deal. ANDREW NUSCA: Huge. ERIN GRIFFITH: We understand that. But listen, Time Warner has basically been in play for the last two years. 21st Century Fox tried to take them over. It didn't work out, the deal fell apart. Everyone's been waiting to see what Jeff Bewkes, CEO, is going to do. We know it's for sale. Apple might be interested. There could have been a Disney deal. There's a lot of suitors out there. AT&T makes a lot of sense. ANDREW NUSCA: So no, no, no. Just because it's been out there, doesn't mean it's a good idea. There's nothing good about this deal. I mean, Time Warner creates content, right? It's a content provider. AT&T takes that content, distributes it. There's-- ERIN GRIFFITH: Perfect unity. ANDREW NUSCA: There is a supplier relationship here, and that's what makes it a bad idea. Tying these two things together, no value. ERIN GRIFFITH: Wait, but why? I mean, if I'm an AOL subscriber, I have AOL cell phone service, I can now get, potentially, HBO and CNN and lots of other great content for free. They can maybe like charge less for that kind of data preferred relationships. ANDREW NUSCA: If you are the head of CNN, or you're the head of Comedy Central, or any number of franchises under Time Warner, you want to distribute your content as widely as possible. ERIN GRIFFITH: You can still do that. ANDREW NUSCA: You don't want to just do to AT&T. No, it hurts your leverage. If there's preference over here, there's no value here. ERIN GRIFFITH: No, no. Listen, though. They know that this business model that they currently have, which is selling big expensive cable packages, is on its way out. They're scared of Netflix and cord-cutting. They're trying to do the skinny bundle thing, and it's not really working. ANDREW NUSCA: But HBO is working all right. ERIN GRIFFITH: Shareholders also know that, and they know a deal has to be made. So this is great distribution, and it's probably the future. It's mobile. ANDREW NUSCA: No, no. A deal has to be made. Desperation does not mean there's a good deal in play. I mean, come on. Have we already forgotten about AOL Time Warner. It wasn't all that long ago, but it was the worst corporate merger in history. And part of it was, obviously, the price. But the other thing was, two different cultures. You can't just smash two things together and go, well, it's got to work out. ERIN GRIFFITH: These are both Fortune 100 companies. I think their cultures are probably similar enough. And also, you're forgetting the fact that AOL Time Warner failed because it was made at the height of the tech bubble at way overpriced valuation. This is far different. [BUZZER] ANDREW NUSCA: Well, that's all the time we have today. Thank you very much. Come to fortune.com for more Tech Debate. [THEME MUSIC] 

Why the AT&T-Time Warner Deal Is Bad for Networks

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welcome the fortune tech debate, where we debate the issues of the day in under two minutes. Today's issue. The A T and T Time Warner deal all right, two minutes on the clock. I think this is a good deal. You know, it's a terrible I know that here doesn't grave. It was $85 billion. It's a huge deal. We understand that. But listen time where has basically been in place for the last two years? 21st Century Fox tried to take them over. It didn't work out. The deal fell apart. Everyone has been waiting to see what Just because you're gonna do we know that for sale Apple might be interested. There could have been a Disney deal there out there. 18 team makes a lot of no, no, no, no, no. Just because it's been out there doesn't mean it's a good idea. There's nothing. There's nothing good about this deal. Time Warner creates content, right? It's a content provider. AT and T takes that content, distributes it, the unity. There's a supplier kind of relationship here, and that's what makes it a bad idea. Tying these two things together No value. It But why? Why? I mean, if I'm on a well subscriber, I have a, well, cellphone or start cell phone service. I can now get potentially HBO and CNN and lots of other great content for free. You know, they can, maybe, like, charge less for that Hannah data preferred by the lady You were the head of CNN or you're the head of Comedy Central or any number of franchises under Time Warner. You want to distribute your content as widely as possible. You don't t know. It hurts your leverage. If there's kind of preference over here, there's no value. Listen, they know that this business model that they currently have, which is selling big friends of cable packages, is honest way out there, scared of Netflix and cord cutting. They're trying to do the skinny bundle thing, and it's not really what each working. Our shareholders also know that, and they know a deal has to be made. So this is great distribution, and it's probably the future. It's mobile. No, no deal has to be made. Desperation does not mean there's a good deal in play. I mean, come on, Have we already forgot about a ol Time Warner wasn't all that long ago, but it was the worst corporate merger in history, and part of it was obviously price. But the other thing was two different cultures. You know, you can't just smash two things together and go well, you know, it's got a Fortune 100 companies. I think their cultures are probably similar enough. I'll call You're forgetting the fact that AOL Time Warner failed because it was made at the height of the tech bubble at way overpriced valuation. This is far different. That's all the time we have today. Thank you very much. Come to fortune dot com for more tech to be, innit?