The AT&T/Time Warner Merger: How Will It Affect You?

AT&T and Time Warner, out of nowhere, announced an $80 billion merger that would combine the telecommunications giant with the sprawling media company. AT&T is best known these days for its mobile service, but it also operates DirecTV, U-verse cable television, landlines, and provides broadband internet in some parts of the country. Time Warner, meanwhile, dabbles in everything from movies (Warner Bros. and New Line Cinema) to television (CNN, HBO, Cartoon Network) to comic book publishing (DC Comics).

In other words, if this merger goes through, it’s going to affect how you watch TV. And if it collapses, it might affect your retirement account, to boot.

The most noticeable effect will probably be that streaming services will get even more partisan and fractured than they already are. AT&T subsidiary DirecTV is already gunning for Netflix with its DirecTV Now service, which AT&T is offering as part of its mobile systems. And if this deal goes through, AT&T owns the Warner Bros. catalog.

So, unless government regulators step in, expect shows like Friends and Smallville to disappear from Netflix, and HBO’s back catalog tovanish from Amazon Prime once any contracts expire. And don’t expect to find many Warner Bros. shows or movies to appear on Netflix or Hulu if it can possibly be avoided contractually, although CW fans will still be catching their favorites on Netflix. AT&T is likely planning to keep the big, attention getting stuff for itself, which includes the DC superhero franchises, Harry Potter, and Lego movies.

Time Warner owns a 10% stake in Hulu, alongside Comcast, which means two bitter rivals for your cable dollar are now begrudgingly “friends” insofar as the streaming service is concerned. Just what, exactly, this means for Hulu is a bit up in the air. AT&T will probably honor any contracts Time Warner has with Hulu, and the ownership stake is fairly important for pushing certain Time Warner properties. Still, now Hulu is in the unenviable place of potentially being part owned by a direct competitor; AT&T might resolve the problem by selling off its stake, but that would also leave AT&T with no obligation whatsoever to provide Warner Bros. content, like the Adult Swim shows, to Hulu.

AT&T had an investment in you buying television access every month instead of streaming content before it bought Time Warner. Now it may own HBO, TBS, and CNN, plus all the related channels — ten major cable networks in all, not to mention a stake in the broadcast network The CW. So if you get your cellphone through AT&T, expect the hard sell to sign up for DirecTV, probably in the form of a bundle. Not that AT&T will be alone in trying to sell you cable, internet access and mobile service in one package: Comcast has tricked Verizon into helping them do exactly that.

Despite how it seems, in hindsight this merger was inevitable. The telecommunications industry is struggling with flat growth and fighting each other for the same fickle bunch of customers, and AT&T has not only seen its merger with T-Mobile shot down, it watched the Comcast and Time Warner Cable would-be merger get spiked too.

The message from regulators to telecom companies is clear: If you want to grow, buy into another industry. Comcast has already done it with Universal and NBC, AT&T is following suit, and don’t be surprised if more cable companies and telecomm providers, or even companies like Apple, get into the act and start snapping up major Hollywood studios, TV production companies, and other “content producers.” Also, don’t be surprised if it ends poorly for all involved.

Time Warner has been a bride before: AOL bought them for $164 billion in 2000. That was called the biggest mistake in corporate history by, awkwardly, the guy who runs Time Warner. And if this merger falls apart, it could result in canceled shows, the collapse of streaming services, and billions of dollars lost on the stock market. If you own either AT&T or Time Warner stock in your 401(k), you might want to keep an eye on how this merger goes.

To be fair, part of the reason the 2000 merger failed is that AOL’s business was on the verge of collapse and didn’t realize it. AT&T is far more stable as a company. Still, the history of modern pop culture is littered with outsiders coming into the entertainment industry, from manufacturing conglomerates to liquor distillers, and it’s ended badly for all of them. Entertainment is an absurdly volatile business full of hinky accounting, trends that come and go in a flash, and millions of dollars won or lost in the space of a weekend. It’s not for the faint of heart, and hopefully, AT&T remembers that as it pursues the merger.