Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Apple 'Monitoring' AT&T's Potential Time Warner Acquisition
- Thread starter MacRumors
- Start date
- Sort by reaction score
By owing the front end, Apple makes money on each of these HBOs, more than they all can make. Yes, it can become on of them, but what for? Merely increasing revenue by 1.5 billion, when by expanding the front-end they can earn 3x of that? Do you seriously think that users pay only once to Apple 149 dollars and not a cent any more? They become paying consumers, buying AppleTV channels, including the very HBO subscription you mention as a brilliant model. However, Apple gets its share not just from HBO but from other subscription models as well.
You realize that Apple becomes richer not when it becomes one of content deliverers but when there are many more content deliverers like HBO, delivering their content through Apple platform without any costs for Apple? For Apple, the endgame is not content per se; it is monetizing the flow of content. There are two ways: one to charge the consumer directly, which is difficult due to low margins I already explained; another is to leave the risk to the content deliverer (who mostly also doesn't own the content - just packages it), and tax the latter. In terms of business, the second option is far better. You don't have to worry for AppleTV staying without content: the sheer force of market will force any studio to literally beg to enter AppleTV platform; now it can be done just by creating a specialized app for AppleTV Store, which (surprise, surprise!) everyone is implementing.
in a way, HBO itself is a platform like AppleTV; so that even makes less sense for Apple to own it, because it controls the gates for HBO to enter its own AppleTV platform; otherwise, it will be like it's actually duplicating its efforts with the same meager result, which is not good for everyone concerned, including consumers.
Then there is also issue with competing networks each of whom may not like Apple as a content provider, in a process endangering the very AppleTV platform, a situation which Apple would want to avoid at any cost.
Last edited:
Apple controls all our video/music/etc. Is that any different?
If you get into the apple ecosystem, it's exactly what is happening. And piece by piece they are adding more blocks ....one giant company.
Charter bought Time Warner Cable and Brighthouse and merged all three companies to form Spectrum. ATT is looking at buying Time Warner, a completely separate company.
[doublepost=1477129616][/doublepost]
When you buy out a company, you buy out the people already running it as well.
I watch old tv shows from my childhood on Hulu and Netlfix with my family for about an hour each evening after dinner. We stream a movie about twice a month. And we watch news only when something major is happening. Mostly, we are a family of readers.
I watched a lot of tv in the 70's and 80's. I largely weaned myself off of it in the mid 90's when my work schedule picked up and networks started getting trigger happy, cancelling some well written shows without really giving them a chance.
Now that tv watching is messier than ever, forget about it.
I'm sure a lot of companies are monitoring this, including AT&T's direct competitors. But why is that newsworthy?
[doublepost=1477134084][/doublepost]
Yes. Scary that anyone thinks this is something Apple should do.A pretty fascinating flow chart of the AT&T, Time and Warner evolution. Reminds me of the map of the London Underground, only with fewer destinations.
[doublepost=1477108991][/doublepost]
From what I am reading the final price could be north of $100B.
This is the kind of deal I hope Apple never makes.
Anything with Apple in the news draws the clicks.
Especially when it's no small secret that Apple will eventually want to pivot into its own content creation arm.
Sure but it's own "content creation arm" isn't the same as buying Time Warner for $100B. I wouldn't consider anything Eddy Cue oversees right now to be best in class, certainly not Siri or iCloud. Last thing Apple needs right now is a distraction in the form of a major acquisition.
Won't stop the pundits from making outrageous claims like how Apple should acquire Spotify or Netflix.
Just another day in the "Apple should acquire X company and here's why" rumour mill.
Time Warner has the content and AT&T has the pipes. Not much chance of regulatory resistance to this one. $86B combination but effectively selling to itself when all is said and done.
Much as HBO content is great, from a financial point of view I think it would be much cheaper for Apple to roll their own. If T is paying $85b , AAPL would have to go to at least $95b - you could build a studio from scratch, hire top notch staff, and make hundreds of TV series and movies for that. You could probably even bake a TV news service too - heck WSJ is laying a bunch of people this weekend; hire them. Yes, you'd have to get the talent to pick the scripts etc, but there are a lot of talented people out there.
But even if you did that, how would that return on equity compare to taking a fat 30% on whatever AT&T/Time Warner is churning out (or whatever studio is willing to play ball), for pretty much doing nothing by providing iTunes delivery? Nothing can beat iTunes as far as profitability goes, the margins are "off the charts" as Tim would say, so as long as their services revenue keeps growing, and more people keep signing up, there's limited incentive for flushing all the winnings down the toilet on a content deal.
It's a shame that China has blocked Apple streaming because that's really where the money is. But, if Eddie Cue is refusing to compromise on margins, and thus losing out on deals, it's because Apple must know they can still grow their content even without the big libraries.
Maybe a happy medium would be to commission one or two exclusives a year from a small studio just to keep iTunes relevant. That's obviously what they're aiming at with the car karaoke thing and the app series, but I think they could be a wee bit more ambitious. Step 1, find a good book and buy the rights.
But even if you did that, how would that return on equity compare to taking a fat 30% on whatever AT&T/Time Warner is churning out (or whatever studio is willing to play ball), for pretty much doing nothing by providing iTunes delivery? Nothing can beat iTunes as far as profitability goes, the margins are "off the charts" as Tim would say, so as long as their services revenue keeps growing, and more people keep signing up, there's limited incentive for flushing all the winnings down the toilet on a content deal.
It's a shame that China has blocked Apple streaming because that's really where the money is. But, if Eddie Cue is refusing to compromise on margins, and thus losing out on deals, it's because Apple must know they can still grow their content even without the big libraries.
Maybe a happy medium would be to commission one or two exclusives a year from a small studio just to keep iTunes relevant. That's obviously what they're aiming at with the car karaoke thing and the app series, but I think they could be a wee bit more ambitious. Step 1, find a good book and buy the rights.
I think it a good fit for At&T. So, who cares? whatever.
Apple should stay the F out of content. It will be them spinning their wheels when they have actual things to do.
Besides,
Remember when the last time another tech titan bought Time Warner?
That went real well for AOL. I'm talking about synergy there!
I would say that Hulu would be the best fit for Apple and the best content platform hands down, but the app is already on the Apple TV, so is HBO, so is Netflix.
So why buy the cow, the dirty fat cow, when you get the milk for free. Apple TV already gets all of this without wasting its time and money.
Apple should stay the F out of content. It will be them spinning their wheels when they have actual things to do.
Besides,
Remember when the last time another tech titan bought Time Warner?
That went real well for AOL. I'm talking about synergy there!
I would say that Hulu would be the best fit for Apple and the best content platform hands down, but the app is already on the Apple TV, so is HBO, so is Netflix.
So why buy the cow, the dirty fat cow, when you get the milk for free. Apple TV already gets all of this without wasting its time and money.
Last edited:
Much better idea for Apple, buy AMC for $5b. Sell the cable assets and all the other crap they don't need for $2-4 b. Keep the Walking Dead, obviously, terminate all agreements with other cable providers and just stream it (Series 1 for free?!!!) on iTunes. Then build on that content, by serializing other graphic novels and similar. I've never watched Fear the Walking Dead, but it sounds terrible, probably axe that too, or give it away for free.
Apple buying Time Warner is a pipe dream. Not that the money isn't there, the company is just willing to only spend a certain amount to buy another company. It's biggest acquisition is still Beats Audio (Due to Cook). In this case, "monitoring" probably means who will be in key leadership positions if AT&T buys Time Warner. The issue is that Cue was supposed to make deals with content providers before the launch of the ATV 4 for paid subscription services that would benefit both them and Apple (similar to Apple Music). Not only did that not happen, but based on how talks ended he probably offended these executives. Apple clearly has a better past relationship with AT&T (first exclusive partner of the iPhone). So Apple has a vested interest to monitor this deal in the hopes that AT&T will forgive the screw ups of Cue (and possibly Cook) and grant them exclusive deals to content.
Yes it's very different, each label, each artist does their own thing. Apple doesn't have to be the label. It just procures the content. Nothing more nothing less. Apple has no business getting into content creation.
The trend of larger companies consuming smaller ones is not a good one. Some it seems like start-ups are aimed at getting the managers fat pay-offs when the companies are bought out rather than establishing a sustainable new company. In any case, at some point these larger companies will become monopolies and we will all pay for it. In my own field (neuroscience) I have seen smaller companies with thriving R&D be eaten up by larger companies that strip IP and physical assets and the shut the R&D. It is disastrous in the long run - mark my words.
More like a pipe nightmare. Time Warner has been through so many chew-ups and spit-outs over the last twenty years it is now a Frankencompany. Good luck to AT&T if they think they can absorb that much history without ending up with a bad case of indigestion. If you think Apple has lost focus now, imagine the massive hotfoot they'd be giving themselves just so they can say they own media content.
All major networks produce a significant amount of their own content. Warner Bros. is one of the only studios without a significant network distribution system. It's co-ownership of the CW with CBS is the closest it comes.
Yes Apple benefits on every distribution deal it carries, but so far hasn't made a compelling reason for anyone to invest in Apples platform for TV content. Amazon on the other hand is producing some award winning content that is driving people to their platform, just as TV networks drive customers to their networks with original programming, which is cheaper for them to produce as they earn 100% of the ad revenue. Once on the network, they tend to keep viewers eyeballs for other programming.
If Apple wants to compete with Amazon and Google, and now ATT, creating their own exclusive content is the way to go. And indeed, they have already demonstrated their grasp of this proven concept with Apple Music and its exclusive content deals. But that's an expensive model to maintain since at most Apple only ever gets a percentage of that content, and gives hem no guarantees of attracting the best deals over its competitors who can draw from the same pool of talent to offer the same thing. The only way to maximize leverage of the platform is to control the product, at least some of it,
As a die hard Apple fan, even I can see that most new TV comes with Android TV built in.
Apple will not "own" the front end unless they do something drastic.
Considering Google's advancements in AI and voice recognition most of Apple TV's so call "innovative" features can easily be replicated if not already available on Android TV.
[doublepost=1477154617][/doublepost]
Unfortunately whatever Eddie Cue touches turns into a big mess.
App Store didn't start having some much needed changes until it's ripped off Eddie's hands.
I agree that it would be a really different role for Apple to have that beast be part of it. And of course people would expect Apple like service across areas that don't make the money to support Apple like service. But I wonder if the times are changing so quickly that trying to strike deals with media companies is over. They are either going to be owned by or own companies who make their money from the delivery aspect. Unless some legislation comes along to stop this pile up, there really will be only 2 or 3 companies producing most of the mainstream programming and they will own the distribution. And They won't strike any 'deals' with anyone. You either are part of their system or you are not.
[doublepost=1477155171][/doublepost]
I'm not sure Amazon has this figured out either as they are using media to drive customers to buy stuff from their 'store'. I don't think their media service is at all profitable. So unless you ave a giant online store that you need people to subscribe to and you need to give them benefits for that subscription, I don't know if it makes that much sense for companies to play that game.
AT&T is already knee deep in debt. Not sure how they are going to secure the financing the complete the deal.
Maybe Apple can loan them the money. lol
This has nothing to do with the article, but it's obvious that all the major players want to remove the actual wire from your house, and force us to get not only our internet but also the tv content wirelessly. They do not like the fact that when wired, they really can't enforce data caps, however, wireless laws are much more lax, and they can have much lower data caps at a much higher price.