Tags: AT&T | CEO | Merger | Vertical | Non-Competing | Companies

AT&T CEO Randall Stephenson: Merger 'Vertical' Between Non-Competing Companies


(CNBC/"Squawk Box")

By    |   Monday, 24 October 2016 09:30 AM

AT&T's $85 billion cash-and-stock deal to buy Time Warner is a "pure vertical integration" between two non-competing companies, the telecommunication giant's CEO, Randall Stephenson, said Monday, while insisting that the deal is a "natural evolution of our business model."

"This is one where the nature of the deal is unique, and it's a vertical integration, a big merger," Stephenson, appearing on CNBC's "Squawk Box" with Time Warner CEO Jeff Bewkes, explained.

"As you think about the areas that have been contentious over the last few years, they have been horizontal mergers, and people are being concerned about a competitor being taken out of the marketplace."

As AT&T competes "nowhere," with Time-Warner, "we are not talking about changing how the content is made available to other people or customers or distributors," said Stephenson. "While regulators have concerns with vertical integrations, those are always remedied by conditions imposed on the merger and that's how we envision this one to play out."

Saturday, AT&T officially announced its plans to buy Time Warner in a step, that if regulators approve, will form a broadband and satellite TV powerhouse in movies and television.

Shortly after the announcement, GOP presidential nominee Donald Trump, during a policy speech in Gettysburg Saturday said he opposes the move and will fight it if he wins his election.

The merger, Trump said, would be "an example of the power structure I'm fighting." Trump also suggested he would favor a breakup of NBC and Comcast Corp., a merger completed in 2013, as such deals, he said, are "poison" to democracy and result in companies "telling the voters what to think and what to do."

Stephenson, though, denied that the timing of the announcement had anything to do with politics or the presidential election.

"We never talked about that," he said. "A deal like this of this magnitude, and the potential for leaks, they are really bad for a deal like this, and once you agree on what the deal should look like, you move, and that's what we did as soon as we got the construct in place and agreed on the price."

Meanwhile, innovations planned will be available to the entire marketplace, said Stephenson. Bewkes, who will stay on at the new company for one or two years after the merger takes place, commented consumers will end up with more choices because of the mammoth deal.

AT&T is already set to launch a new, "mobile-centric" mini bundle of television channels, including 100 premium channels, said Stephenson.

"It's a purely over-the-top video product," he said. "DirecTV Now is what we're calling it."

He said the service should be "radically lower" in cost than similar offerings, and comes after AT&T's purchase of DirecTV last year for $48.5 billion, a move that added satellite television to wireless and broadcast subscribers.

AT&T also has plans to roll out a 5G mobile network, Stephenson said. When that happens, it would bring 1 GB speeds to be delivered wirelessly, and the Time Warner deal would help accelerate that effort.

Analysts are already drawing comparisons with the 2000 Time Warner-AOL deal, which failed, but Bewkes said the mergers are nothing alike.

"You did not have wireless and the advertising business moving to customized data-driven ads, which in those days cable couldn't do," said Bewkes.

Time Warner brings an entertainment portfolio to AT&T if the merger is approved, including TV networks such as HBO, CNN, TBS, and TNT, along with the Warner Bros. movie studio. It also owns a 10 percent stake in the video streaming site Hulu, reports CNBC.

There was at one time talk that Apple was interested in buying Time Warner, but Bewkes said that was not going to happen.

"They are in a different business," said Bewkes. "They are busy with phones and devices on a global basis and I am not sure they are focused on media production."

Time Warner does a great deal of business with Apple, Bewkes continued, and talks to CEO Tim Cook and others "all the time about a lot of things," but not about merging the companies. Rumors that Apple "kicked the tires" for his company were overstated.

"If you park your car on the street somebody might come by and kick the tires, and you wouldn't even know it," said Bewkes.

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AT&T's $85 billion cash-and-stock deal to buy Time Warner is a "pure vertical integration" between two non-competing companies, the telecommunication giant's CEO, Randall Stephenson, said Monday...
AT&T, CEO, Merger, Vertical, Non-Competing, Companies
Monday, 24 October 2016 09:30 AM
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