The acquisition between AT&T and Time Warner is a vertical merger. Vertical merger refers to a concentration between firms with different roles within the same industry. As Randall Stephenson, AT&T’s chief executive said there was no overlap between the two business which means there is no relationship of competition, so this was a vertical merger. AT&T has a traditional telecommunications channel while Time Warner has a trendy streaming media content. It is a combination between content and distribution which may bring new ways of operating for customers, content creators, distributors and advertisers in the media and communications industries.
As Mr Bewkes said, The sale would change audience behaviour and technology which would create…show more content… Combining the video contents and distribution of AT&T will provide more products which will increase the improvement of new services and thus be beneficial to consumers. (10) contents of Time Warner consist Game of Thrones, Batman, the right of NBA basketball game etc, which will attract a large amount of consumers and bidders of Media industry.
For AT&T, owning Time Warner will provide exclusive contents helping to compete with Verizon, T-mobile, Spring and other wireless telephone competition companies and digital video organizations. (4)
Mr Bewkes said, AT&T’s takeover of Time Warner may eliminate the pressure of traditional video and wireless business. Furthermore, it will reshape the pattern of media and telecommunications and establish the largest vertical integration of contents and distribution companies globally. (15)
After the announcement of the deal, the share price of AT&T declined, suggesting investors were highly vigilant of the liabilities faced by the final company. The total liabilities of AT&T was up to 126.8 billion dollars after the acquisition of directTV. It resulted to the rating agency Standard & poor’s downgraded the company’s rating. The 24.5 billion dollars liability of Time Warner will pass on to AT&T if the deal is