AT&T’s new video venture could lead the carrier into partnerships with some of its direct competitors. The company is teaming up with The Chernin Group in deal that could eventually make AT&T an investor in OTT services that rely in part on the networks of its competitors.
This is not the first time AT&T has tried to go over the top. Last year the company reportedly bid for Internet video service Hulu before owners Disney and Fox called off their planned sale of the unit. The Chernin Group was AT&T’s partner in that bid as well. Founder Peter Chernin is a former president of the News Corporation. Together, AT&T and The Chernin Group will invest $500 million in their newest venture, the same amount they reportedly bid for Hulu last year.
“Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space,” said AT&T’s chief strategy officer John Stankey in a press release.
“It sounds like ‘If you can’t beat them …join them’,” said analyst Sue Rudd of Strategy Analytics. “I think operators like AT&T are figuring out how to add value to OTT and maybe now deliver it more efficiently than OTT guys alone with their own brand.” Strategy Analytics noted that in addition to distribution and billing expertise, AT&T can bring its AdWorks solution to the table.
Peter Chernin said that he values AT&T’s mobile network expertise, noting that consumers are increasingly turning to smartphones and tablets for video delivery. But it the venture does invest in OTT content providers, it could find itself dealing with other mobile network operators in addition to AT&T. On the other hand, content could be exclusive to AT&T and the carrier could use it to increase the value of its mobile data plans and its U-verse broadband service.
Strategy Analytics’ Sue Rudd noted that AT&T may be keen to control content in the face of the potential merger of Time Warner and Comcast. She said that the combined cable companies will have extensive content ownership and considerable bargaining power with content providers.
Follow me on Twitter.
