Direct to consumer distribution and advertising key to AT&T success
With its acquisition of Warner Media, AT&T made a significant pivot that will continue to reshape its business for years to come. Dropping billions on content, coupled with network reach, creates very interesting opportunities around data-driven advertising. During the Goldman Sachs Communacopia Conference last week, AT&T Chief Executive Officer Randall Stephenson gave some insight on what it takes to operate a “modern media company.”
“Two plus years ago we started down this path,” Stephenson said. “We said if we’re going to be relevant in media, you’re going to have to have a few elements. It begins with premium content. Time Warner, getting the deal done and getting it close this year…kind of check the box on premium content.”
Although AT&T’s acquisition of the former Time Warner, which includes the Turner broadcasting networks, HBO, CNN and Warner Brothers Studios among other properties, closed earlier this year, the Department of Justice is appealing a previous decision to allow the merger to go forward. DOJ has argued that the consolidation would result in an anti-competitive market environment. A federal judge disagreed.
“It was a very interesting process going through the litigation,” Stephenson said, describing the DOJ’s action as “not a very good case. The Department of Justice lost the case. The burden of proof was on them…They didn’t come close to meeting the burden of proof.” With the appeal, “They have to demonstrate that the judge got it wrong. We feel very good about where we stand on appeal.” He also called out the DOJ for “burning United States taxpayer resources.”
Back to the modern media company. “If you’re going to own premium content, we think it’s an imperative that you have direct to consumer capabilities. Media companies need to work and go aggressively in getting directly to the consumer.” AT&T has around 170 million “direct to consumer relationships,” as Stephenson described them.
Next step is ad technology. “Advertising models will be very, very important. We think we have the elements that are gonna be required to stand up a very impressive advertising business.” Stephenson noted the Turner advertising inventory would be coupled with consumer data insights collected across AT&T’s businesses.
