Time Warner CEO: Merger Needed To Compete With Internet Titans

Time Warner Chief Executive Jeff Bewkes on Wednesday defended his company’s planned merger with telecoms firm AT&T as necessary to compete effectively for advertising with internet giants like Google and Facebook.

Reuters reports Bewkes told Judge Richard Leon, who will decide if the $84.5 billion deal may go forward, that the U.S. Justice Department was wrong to say that AT&T would be reluctant to license Time Warner’s TV and movie content to rivals, causing blackouts, in order to win over new customers to AT&T subsidiary DirecTV.

Jeff Bewkes

“I think it’s ridiculous,” said Bewkes, who has been CEO for more than 10 years. “If our channels are not in distribution we lose lots of money (from lost subscriptions and advertising).”

Bewkes argued it was in Time Warner’s best interest financially to license its television channels, which range from movies to CNN to sports, broadly online.

He said Time Warner had been hampered in innovating and advertising because it does not have the granular information about viewers held by pay TV and internet companies.

With digital advertising, Chevrolet, for example, can target car ads at people looking to actually buy a car, he said.

AT&T has said a key benefit of owning Time Warner is that it can take data about its 141 million U.S. wireless subscribers and 25 million video subscribers and marry it with Time Warner’s programming to enable advertisers to target TV ads.

Targeted TV ads, also known as addressable TV, have yet to go mainstream because they involve renegotiating carriage deals with programmers and distributors, said Brian Wieser, an analyst at Pivotal Research.

Targeted TV could represent more than $100 billion in revenue by 2030 for companies that offer it, according to an April Credit Suisse report, which called it “a largely overlooked benefit of the AT&T/Time Warner transaction.” The ads can be sold at triple the price of regular ads.

John Stankey

Advertisers’ spending on TV ads in 2018 is expected to be around $70 billion, a 1.45 percent increase from three years ago, according to research firm eMarketer.

According to Deadline, AT&T exec John Stankey finally had his chance to testify late Wednesday about the motivation behind the companies’ $85 billion merger.

“The market we are competing in is for time and attention,” he said under direct questioning from lead defense attorney Daniel Petrocelli. “Facebook, Google, Netflix — they are all distracting people from other things they used to do” like tune in linear TV, he said. “That’s the battle here.”

Joining forces, the defense insists, will unlock both efficiencies and customer benefits. The Department of Justice contends that the merger will harm rival companies and consumers through higher carriage fees given the companies’ merged might.

Stankey took the stand late in the day’s action. His two hours of testimony followed about three hours on the stand for Time Warner CEO Jeff Bewkes, whom Stankey would effectively replace if and when the long-gestating deal is approved. AT&T CEO Randall Stephenson, who is poised to run the combined company, will testify on Thursday morning.