| | | | | AT&T and Time Warner together | | | They say it's a "combination unlike any other." In a massive $85 billion deal, AT&T has agreed to acquire Time Warner, the owner of CNN, HBO, Warner Bros., and a suite of other media properties. This special Saturday night edition of the newsletter wraps up everything we know about the deal thus far... | | | "The future of mobile is video and the future of video is mobile" | | That's the quote of the weekend, courtesy of AT&T CEO Randall Stephenson, who said it on a conference call with reporters tonight... Seems like a catchy explanation of the deal...
More from Stephenson on the deal rationale: "If you put these two together, you can begin to innovate these types of new services much faster, and get this to market much faster. That's what this is all about..." | | | Half cash, half stock transaction... Here's the press release... | | With HBO and CNN and TNT and Turner Sports on one side of the company, and wireless and Internet and DirecTV on the other side, AT&T will have more power to shape the future of media.
Cable industry vet Paul Maxwell emails: "AT&T acquiring Time Warner makes a great deal of sense, and it gives Comcast a real competitor with content and lots of conduit. But any real outcome depends upon government OK." Now, about that... | | | Execs expect the regulatory review to take 12+ months. The press release forecasts the deal closing "before year-end 2017." Some observers are already predicting a bruising process. On the other hand, Comcast-NBC is an obvious precedent. On the OTHER other hand, regulators dissatisfied by the results of Comcast-NBC could apply additional scrutiny here... | | | Opening salvo from Free Press | | | Public interest group Free Press, which staunchly opposed Comcast-NBC, sent out this opening salvo: "Any time you hear media executives talking about synergies, throwing around the business-babble that always accompanies these rumors, you know it's time grab your wallet and hang on tight. Big mergers like this inevitably mean higher prices for real people..." | | | Talks started in August... | | On the call with reporters, Stephenson and Time Warner CEO Jeff Bewkes said the two companies started talking in August... The two men met in NYC for a "periodic check-in ... and the more we talked, the more the deal fell in place," Bewkes said... "We have a very common view of the world," Stephenson added...
Word of the possible deal leaked out on Thursday... AT&T execs were eager to get it done before Monday morning... | | | What Bewkes' role will be | | | Jeff Bewkes is retiring... but not yet. He said on the conference call that he will remain CEO throughout the regulatory review process. "After that, I've agreed to stay on though a transition period that Randall and I will work out, for some period of time."
He called it a "reasonable period of time." What about his top lieutenants? Long-term deals: "I expect basically all of our creative and business execs to go on for many years." | | Bewkes called while Cristina Alesci, Poppy Harlow and I were getting ready for a live segment about the deal on "CNN Newsroom." He was still answering our first question -- asserting the deal is "pro-consumer" -- when the commercial break suddenly ended and I had to hang up on him. Live TV! | | | Were there other potential bidders? | | | What about Apple? Liana B. Baker tweets: "Execs dodge whether there were interlopers or other interested parties, says [that's] not what drove this deal. Bewkes says 'no activity like that...'" | | | Remember that THR reported on Friday that former Fox exec Peter Chernin, 65, "is destined to take a major role overseeing Time Warner." On tonight's call, Stephenson said "I don't have any idea what Peter's plans are... I speak to him a lot... I think Peter's got his hands full right now..." | | | What this deal means for CNNers | | This section is for my CNN colleagues. I know what you're probably wondering right now...
In the short term, nothing really changes. M&A sometimes slows things inside companies, but hopefully that won't happen here.
AT&T does not intend to spin off CNN as a separate company, according to a well-placed source. AT&T views CNN as a "crown jewel" and wants the news division to continue putting up big annual profits. That's one of the reasons why I don't expect much meddling: What CNN is doing now is working. If anything, this deal will accelerate CNN's move into online video, which has already been a priority...
Also worth noting: AT&T doesn't have a news division, so there's not a lot of overlap with staffers in NYC, ATL, DC, and elsewhere. So this is not a merger that triggers lots of layoffs. AT&T is saddled with lots of debt, however, so there could be more pressure to trim costs... | | Growth and power. AT&T thinks it needs to diversify; wants to own programming; and wants to keep Time Warner out of the hands of its huge rivals. Owning brands like HBO will give AT&T a lot more leverage. More from my story:
-- Phones and constant connectivity have changed our lives. These changes have introduced new ways to pay for entertainment; new ways to interact with sports; new ways to distribute news. That's where Time Warner comes in...
-- Specifically: Subscriptions to HBO and news apps from CNN could be sold right alongside wireless service -- all bundled as a part of a customer's monthly bill...
-- AT&T says the deal "mproves its "revenue and earnings growth profile..." Read my full write-up here.. | | | One word: "Diversification" | | | BTIG's Walt Piecyk writes: "We think this deal is about diversification... The entire ecosystem faces challenges, but gaining scale and hedging exposure to one part of the food chain could be attractive to an investor base focused primarily on reliable dividend growth. However, it's hard to see the vertical integration of content acquisition..." | | | Selling "cable" without any cables | | Stephenson is quoted in the press release saying that "a big customer pain point is paying for content once but not being able to access it on any device, anywhere." That's true. "Our goal is to solve that."
AT&T has already been working on this problem... It's about to launch DirecTV Now, a streaming version of cable, with or without Time Warner... But it is arguing that the addition of Time Warner will speed things up and ease the way forward...
And that's one of the primary "customer benefits" the company is pushing. AT&T is being explicit about its intent to take on Comcast, Charter and Dish: "The combined company will strive to become the first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile broadband and video..." | | Trump might try to turn media consolidation -- and this specific deal -- into a campaign issue. In Gettysburg this afternoon, he said: "As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." His audience applauded. Trump also said he would look at breaking up the Comcast/NBC combo.
His comments obviously shocked regulatory experts. His pledge to block the deal -- before regulators even look at it! -- breaks with precedent and places him far to the left of President Obama. "It is wholly inappropriate for a president (or a candidate) to tell the attorney general how to decide a case before the Justice Department has a chance to make a recommendation," Andrew Jay Schwartzman, an attorney who specializes in telecommunications and media policy, told me... Here's my full story... | | | Trump attacking the owners of the media is just his newest way to attack the media. He's furious with the coverage of his campaign; with the way journalists are treating the accusers he calls "liars;" and with the way journalists are covering the polls that almost uniformly show him losing to Hillary Clinton... | | -- Details will come out Monday morning in an 8K filing...
-- Via Deadline: "The entertainment assets will account for about 15% of AT&T's revenues..."
-- Per the WSJ, this is "the biggest acquisition of the year, surpassing Bayer AG's $66 billion takeover of U.S. seed giant Monsanto..."
-- Cravath is representing Time Warner... | | -- FT's Matthew Garrahan tweets: "Nothing like trying to unpick the biggest media & telecom merger ever while your kids watch the Phineas and Ferb movie at blaring volume..."
-- Variety's Brian Steinberg: "The first true reaction to idea of AT&T-Time Warner merger may surface this evening on 'SNL' or tomorrow night on 'Last Week Tonight...'"
-- CNNMoney's Paul R. La Monica: "I can finally explain to my mother what i do for a living. I'll just tell her I work for the phone company..." | | | Sean Spicer on Sunday's "Reliable Sources" | | | Today we added RNC chief strategist Sean Spicer to the lineup for Sunday's show... | | | Dan Rather, Mollie Hemingway, Jane Hall, Matthew Dowd, and Dr. Gail Saltz will also join me... 11am ET, CNN... | | | ICYMI: Here are the highlights from Friday's newsletter... | | | Gretchen Carlson on the cover of Time | | Sexual harassment is "everywhere," Gretchen Carlson says. In an exclusive interview with Time mag, out Friday morning, the former Fox anchor says she has heard from women all across the country since she sued Roger Ailes. The cover says "Carlson Wants to Change the Way Women Fight Sexual Harassment."
According to Time, Carlson "declined to answer any questions about her former employer or the end of her career there." (Nondisclosure clause in the settlement agreement?) But she talked at length about forced arbitration, a subject she will be testifying about at a Congressional hearing... Here's the profile... | | | WSJ offering buyouts to the whole newsroom | | Tom Kludt reports: The WSJ is seeking a "substantial number" of buyouts in an effort to "limit" layoffs, Gerard Baker wrote in a memo on Friday. Baker said that all news employees worldwide are eligible for an "enhanced voluntary severance benefit." The benefit, he said, is designed to "limit the number of involuntary layoffs."
The buyout package will be on the table til Halloween... | | | Facebook's "newsworthiness" standard... | | Seth Fiegerman reports: Facebook is taking steps to avoid a repeat of last month's Napalm Girl controversy, while potentially opening itself up to a new headache. It plans to cut down censorship of offensive posts that may violate its community standards against nudity and violence -- that is, if those posts are deemed to be in the public interest.
Newsworthiness!
The announcement says: "In the weeks ahead, we're going to begin allowing more items that people find newsworthy, significant, or important to the public interest -- even if they might otherwise violate our standards..."
So WHO at Facebook will decide? HOW will they decide? The company says it will work "closely" with "publishers, journalists, photographers" and others "to do better when it comes to the kinds of items we allow." That is awfully vague...
-- Important: According to the WSJ, "Some of Donald Trump's Facebook posts set off debate inside the company" in the past year, "with some employees arguing the posts violated the site's rules on hate speech. CEO Mark Zuckerberg ruled they could stay..." | | | Facebook starting a marketing campaign for Live | | Samantha Murphy Kelly reports: Facebook is introducing a marketing campaign for Facebook Live complete with billboards and a series of TV spots...
-- p.s.: "Instagram appears to be testing live video," The Verge's Casey Newton says... | | | The year late night took a side | | | Editorials. Impressions. Spoofs. Late night hosts are pulling out all the stops to take Trump on, Frank Pallotta writes in this great recap (with lots of videos) of the past year... | | | Obama nominates Rick Stengel | | | Jeff Shell's term as the chair of the Broadcasting Board of Governors has expired. On Friday the White House nominated Rick Stengel to succeed him. Stengel, a former editor of Time mag, is currently the State Department's Under Secretary for Public Diplomacy and Public Affairs. Shell will continue to serve until Stengel is confirmed. John Lansing remains CEO of the BBG... | | | "The Simpsons" spoofs BuzzFeed | | | Sandra Gonzalez has an exclusive first look at Sunday's episode of "The Simpsons," which features a spoof of BuzzFeed, errr, BizzFad. The episode's title: "Trust But Clarify." It's hilarious... Check it out here... | | From the NYT earlier this week: "A television review on Friday about the new Amazon series "Goliath" included an inaccurate discussion of the show's plot structure. The critic mistakenly watched the first two episodes out of order."
The critic was Mike Hale. This correction actually ran earlier this week... But got a lot of attention on Friday after Mediaite and other sites wrote about it... Hale critiqued the "needlessly complicated structure of the initial episodes" due to the flip-flop... | | | What do you like about this newsletter? What do you dislike? Send your feedback to reliablesources@cnn.com. We appreciate every email... And we'll be back Sunday... | | | Get Reliable Sources, a comprehensive summary of the most important media news, delivered to your inbox every afternoon. | | | | | |
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