Answer 1) AT&T is the largest telecommunications company in the United States, which also has a broadband business unit as well as satellite TV brands. Time Warner on the other hand, positions itself as a content company which also has some of the country’s largest entertainment channels as well as a Television and Film Studio. A merger between both is going to benefit AT&T greatly because the unique content generated by Time Warner will now be broadcasted using the expensive wireless and satellite capabilities of AT&T (Selyukh 1).
Answer 2) the business rationale for this merger is that it is a convergence of telecom and media industries which is one of its kind to ever take place. The result will be the creation of a new media conglomerate with a market capitalization of almost $300 billion. Given the nature of the operations of AT&T and Time Warner, the merger is going to create a highly concentrated hotspot of power and influence within the media industry of the country. This is because while Time Warner has a very limited number of channels in its portfolio (CNN, HBO, Cartoon Network, TNT, TBS, The CW), they each enjoy a very large and loyal audience. At the other end, AT&T has almost 90 million subscribers of its wireless services across the country (Selyukh 1).
Answer 3) the most interesting aspect of the info graphic is that the media company with the highest market capitalization is Comcast which is valued at $155.2 billion. The company achieved this figure after it acquired NBCUniversal after which Comcast had products and services in both cable services as well as broadcasting film production and even parks and resorts. The second interesting trend is that cable networks form a significant portion of the total business value for Disney, Time Warner and 21st Century Fox. This indicates that media content companies with strong channel audiences are able to establish and maintain a strong hold in a competitive industry (Selyukh 1).
Answer 4) in my opinion, this is a case of business diversification rather than vertical integration. This is because AT&T and Time Warner will operate in completely different industries and have very different operational models. Time Warner’s business is focused on the various channels it operates along with its film production house. AT&T on the other hand is focused on its wireless cellular service vision as well as its paid TV service subscriptions. Therefore, a merger represents the coming together of two different business categories and therefore qualify as a diversification (Selyukh 1).
Answer 5) during his Presidential campaign, Donald Trump’s position regarding the merger of AT&T and Time Warner was completely negative. When referring to this possible business deal going through, his opinion was that this will result in “concentration of too much power in too few hands”. The most probable reason as to why Donald Trump expressed this opinion is because he wanted to drive home the message that during his term at the office, economic prosperity will be possible for the masses. Allowing the creation of a media and communication giant would have gone against this ideology because it would have given excessive influence and control to one corporate entity (Selyukh 2).
Answer 6) I do not believe that after assuming power Donald Trump will block the merger from proceeding. This is an $80 billion deal and opposing it will create a negative business sentiment in the country. The constituents who supported him during the election will not greatly oppose this merger because it is likely to create additional employment and economic activity which will be welcomed (Selyukh 2)..
Answer 7) if I were in AT&T’s position, in this situation, the best possible use of money and time will be lobbying the new government to support this deal. Simply creating awareness will prove to be an insufficient tool in making the public support this deal (Selyukh 3).
Answer 8) in the end, this deal will most likely go through without any problems because there are two very powerful organizations involved in this situation. Both of them spend a large amounts on their lobbying divisions and are therefore likely to get the Attorney General and the Justice Department on their side and no anti-trust laws will block this merger (Selyukh 3)..
Works Cited
Selyukh, Alina. "The AT&T-Time Warner Merger: What are the Pros and Cons?" NPR 25 October 2016: 1-3. Print.
