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How AT&T now can use Time Warner shows to promote its other businesses to your tastes

How AT&T now can use Time Warner shows to promote its other businesses to your tastes
05 Jul
9:15

Logos for Time Warner Inc. and AT&T appear above alternate trading posts on the floor of the New York Stock Exchange. Now that AT&T has acquired Time Warner, it can use the latter's programming to build up its other business offerings.

Logos for Time Warner Inc. and AT&T appear above alternate trading posts on the floor of the New York Stock Exchange. Now that AT&T has acquired Time Warner, it can use the latter’s programming to build up its other business offerings.

Imagine if, ahead of HBO’s next “Westworld” premiere, AT&T sent a 5-minute video recap to millions of users it knows watch science fiction.

The mobile giant could target young women with the latest trailer of Warner Bros.’s upcoming romantic comedy “Crazy Rich Asians.” Or analyze users’ interests to create customized CNN news clips for customers to watch on their lunch breaks.

That’s just a sample of the ways AT&T could push the $85-billion Time Warner Inc. acquisition to its more than 100 million wireless subscribers and 25 million pay-TV customers.

The Dallas-based phone company – which in June became the proud owner of the Warner Bros. movie and TV studio, HBO and Turner networks – says it’s on a mission to become a modern media company, though it has been short on specific plans so far.

In the coming weeks, John Stankey, the head of AT&T’s newly christened WarnerMedia, must figure out how to use its studio, networks and franchises such as “Harry Potter” and DC Comics to grow its business.

But since the deal closed, AT&T has made bold moves by announcing a new streaming video service and buying AppNexus, a prominent advertising technology company, for a reported $1.6 billion. All together, the maneuvers show a legacy communications business trying to remake itself as a competitor to the likes of Google, Facebook, Netflix and Disney.

“I don’t think we’ve ever seen this big of a company with so many moving parts trying to go in the same direction,” said Jeffrey Cole, director of the Center for the Digital Future at the USC Annenberg School for Communication and Journalism. “This is a key move by AT&T to become a major player.”

As it faces a saturated wireless market and declining satellite subscriptions from its DirecTV unit, AT&T hopes to entice mobile customers by streaming WarnerMedia content to people’s mobile devices, including smartphones. The goal is to take advantage of AT&T’s direct connections with millions of Americans and the user data previously unavailable to entertainment companies.

Warner Bros., HBO and Turner have been at a disadvantage to tech titans because they have limited information about who their viewers are and what they watch. Insights from AT&T mobile phone and DirecTV subscribers could help the entertainment companies decide what shows to greenlight. Marketers could use that information to better tailor commercial messages.

At a recent investor conference, AT&T Chief Executive Randall Stephenson emphasized the importance of the company adapting its entertainment business for a digital, direct-to-consumer era in which Netflix, Apple and Amazon are spending billions on movies and TV programming.

“I believe the days when you can just create premium content and be a wholesaler of that content, those are over,” Stephenson said. “I don’t believe that’s a sustainable business model.”

The company’s recently announced “skinny bundle,” dubbed WatchTV, is a sign of its ambitions in streaming. The roughly 30-channel service, which features WarnerMedia outlets such as TBS, TCM and Cartoon Network, was launched in an effort to retake customers who have cut the cord or have never subscribed to a traditional pay-TV package.

AT&T charges $15 a month for WatchTV as a standalone offering, while offering it for free with AT&T unlimited data plans.

“This is about trying to put a fence around their customer base,” said Daniel Ives, a technology and media analyst at GBH Insights. “In a cord-cutting world, this is their answer.”

The company is also looking to better target advertising to individual households. That will let it reduce the number of ads that play during its programming, while charging marketers more money. A big part of its advertising strategy is to use AppNexus technology to build an advertising marketplace for digital video and television. Based on user data, WarnerMedia and AT&T could serve up ads for certain products to people – cosmetics for female viewers, for example.

Other media conglomerates have found ways of coordinating their disparate lines of business for mutual benefit. Walt Disney Co. is the most obvious example, funneling brands such as Pixar and Marvel through its TV networks, theme parks and merchandising units.

Comcast Corp.’s NBCUniversal has spent seven years perfecting its “Project Symphony” program, in which NBCUniversal Chief Executive Steve Burke and his team come up with a handful of projects each year to promote on all the various business units, including Comcast Cable. Ads for Comcast cable service have featured the characters of NBC’s hit show “This Is Us,” or from the movies “Minions” and “The Secret Life of Pets.”

NBCUniversal’s strategy has produced tangible benefits. Comcast heavily promoted the 2016 Rio Olympics to its cable subscribers and offered special features such as an on-screen home page to point viewers to the channel that featured their favorite sport. Comcast said the push resulted in viewership for the Olympics that summer increasing 27 percent in Comcast homes equipped with the special features compared with homes that lacked that access.

AT&T will be under pressure to pare down the estimated $60 billion in debt it took on to complete the Time Warner acquisition. That prompted Moody’s to downgrade the company’s credit rating. BTIG analyst Walter Piecyk said in a recent report that AT&T has increased its fees for mobile customers, which could help the company whittle down its substantial debt load.

But Batia Wiesenfeld, a New York University Stern School of Business professor who is an expert on corporate change, said AT&T would do well to let the studios and networks continue to operate without undue corporate interference. Comcast, for example, has taken a largely hands-off approach to management of the entertainment business.

“Where you see examples where this is successful, you see them creating these boundaries,” Wiesenfeld said. “The integration is mostly at the top, and you’re not killing the goose that lays the golden egg.”

Source: http://www.rep-am.com/news/news-business/2018/07/04/how-att-now-can-use-time-warner-shows-to-promote-its-other-businesses-to-your-tastes/

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