AT&T Goes Hollywood
A. Michael Noll
© Copyright 2017 AMN
AT&T wants to purchase Time Warner — the White House and the Justice Department correctly oppose the acquisition. The acquisition would create a huge vertical integration of content and conduit that would not benefit consumers, in my opinion. But the local telephone companies have a long history of lusting after content and Hollywood.
Today’s AT&T is really a former local Bell company: the past Southwestern Bell that then became SBC Communications which then acquired AT&T and then wrapped itself in the AT&T identity.
Over two decades ago, the local Bell companies chased after the entertainment industry. And now again one of the remaining of the two super Bells – AT&T – is again inflicted with Hollywood fever.
AT&T is a conduit company, providing the cables and wireless paths over which consumer access various services. In 2015, AT&T extended its control over conduit through its acquisition of DirecTV for nearly $50 billion, delivering video over satellite to homes. But throughout history, the old Bell operating companies have lusted after also providing the content that their customers want to access over the conduits.
The telecommunication conduit business in the United States has become mostly a duopoly. AT&T and Verizon dominate wireless. Either AT&T or Verizon and a CATV company dominate wired access. Duopolies inherently adjust “competition” so that markets are shared and profits maximized, without attracting government attention. In the late 1940s, the studios were forced to divest their vertical integration of movie theaters. So today If AT&T wants to become a content company, it should be required to divest its wireless and wireline conduit businesses.
AT&T knows little of Hollywood and the news and entertainment businesses. It should stick with its strengths in providing wired and wireless conduits, as I wrote in 1993.* One might argue that if AT&T wants to lose its shirt chasing Hollywood, then let it. However, like decades ago, now is still not the time for AT&T to go Hollywood.** “Hollywood” might well end up as “Follywood” for AT&T.
*“Baby Bells Should Stick With Strengths,” by A. Michael Noll, Los Angeles Times, October 22, 19933, p. B15.
**“The phone company has gone Hollywood,” by A. Michael Noll, Morris County Daily Record, January 7, 1994, p. A11.
November 22, 2017
Access Is Not Content
A. Michael Noll
October 7, 2016
© 2016 AMN
Twenty years ago in 1994, Bell Atlantic almost purchased John Malone’s company TCI—but sane minds ultimately prevailed. However, in 2000, Time Warner merged with AOL, and nine years later broke up. And then there were the ill-advised attempts of the telephone companies to enter Hollywood new media. There are lessons here: these kinds of mergers do not work.
Today’s mantra of new media seems to be “repeat the mistakes of the past.” And thus Verizon last year acquired AOL and this year seems about to acquire Yahoo. These acquisitions make no sense–they appear to be nonsense.
Decades ago, America On-Line (AOL) started the email craze, joined years later by Yahoo. These two were significant brands, but both companies failed to reposition themselves as the world of new media and the Internet changed and morphed. They both were left behind. It does not help Yahoo that its servers seem to crash frequently and recently it suffered a massive hacking invasion.
It seems that Verizon is stuck in the past, acquiring decades old brands that no longer matter. Perhaps Verizon wants to potion itself as not only an access provider but also as a content provider. But the prime services offered by AOL and Yahoo are email—a service that Verizon already offers its access customers.
Somehow by now I would have hoped tat the media and communications worlds had learned that access is not content—and that both are “king.” Without access, there is no content—without content, access is useless. They go hand in hand—and are very different industries. Bell Atlantic and the other Baby Bells learned many decades ago that they knew little of Hollywood and content. It seems today that Bell Atlantic’s successor Verizon has forgotten these lessons and is intent on returning to the past of AOL and Yahoo.
Wow, what nonsense!
The Quello Center Advisory Board identified the future of content delivery as one of the Center’s most critical issues for research. Late in 2014, Professor Steve Wildman provided an overview of the prospects for new forms of content delivery to a group of visiting executives. Prior to his lecture, Bill Dutton interviewed him about the key points he planned to cover. You’ve find this video of this interview to be a succinct summary of major issues facing the future of broadcasting and the media more generally. We’d welcome your comments – whether you agree to disagree with the future painted by Professor Wildman.
His video is at: https://vimeo.com/110827928