Like advertising, cable companies in the U.S. innovate and modify over time. Recently, AT&T has begun the process to acquisition Time Warner Inc. for $85.4 billion, creating one of the biggest sales or mergers to date. With such big companies deciding to buy out others, there is one haunting question, what is the impact?
Possible Merge of Two Giants
AT&T is one of the leading mobile carries in the U.S. and now is one of the leading satellite carriers, as it purchased Direct TV last year for $48.5 billion. On the other hand, Time Warner Inc., is one of the biggest media and entertainment conglomerates in the U.S. Time Warner owns many different cable brands, such as Turner Broadcasting System, CNN, HBO, Cartoon Network and Time Warner Cable.
The CEO's of both companies are hopeful that their merger will be approved considering it is a “vertical” merger, which can be described as two non-competing companies joining forces. According to Investopedia, “A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge operations. Most often, the logic behind the merger is to increase synergies created by merging firms that would be more efficient operating as one”
What is the Impact?
With this possible merger comes a lot of advantages and disadvantages.
Advantages:
- It will bring new content to its consumers on TV and mobile by delivering premium content to every screen and creating better mobile, first-hand experiences.
- Advertising will be more geared toward consumers. According to att.com, “Customer insights across TV, mobile and broadband will allow the company to: offer more relevant and valuable, addressable advertising; innovate with ad-supported content models; better inform content creation; and make OTT and TV Everywhere products smarter and more personalized”
Disadvantages:
- Increase in Prices- The value of paying for content could rise.
- Too much control among a few titans- President-elect Donald Trump shared his concerns with the New York Times stating, “It's too much concentration of power in the hands of too few."
As one of the biggest mergers in history unfolds, concerns of control, price and content creation arise among consumers and business owners. The more acquisitions of cable companies there are, the less diversity and variety there will be for consumers to have and competition may decrease. Per Integrated Advertising’s founder and President, Mary Lopez- Houston, “I think it’s probably going to come down to three or four key players, two of them being Google and Apple.” Only time will tell if this merger is meant to be for the greater good of the people or the company.
Integrated Advertising is a full-service agency based in Jacksonville, FL., known for its expertise in strategic planning and negotiating, its award-winning commercial production, and promotional and event management. At Integrated Advertising, we help each client strategize the right plan to place the right ads, in the right spot, at the right time, so you can have a profitable company. Visit http://www.intadvertising.com/ or call (904) 296-2585 for more information
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