UK news media want tech giants to pay them annual license fees

A UK governmental review into threats to the press, principally from the internet, has led to calls for tech giants to pay for news content that appears on their platforms.

The Cairncross review asked for submissions on the matter earlier this month and has so far received them from the News Media Association, press regulators IPSO and IMPRESS, and the National Union of Journalists. The NMA one is headed “NMA Calls For Licence Fee Agreement With Tech Giants”.

“A fair and equitable content licence fee agreement would ensure that news media publishers are appropriately rewarded for the use of their content by the tech giants, safeguarding the future of independent journalism which underpins our democracy,” opened the NMA press release.

“The primary focus of concern today is the loss of advertising revenues which have previously sustained quality national and local journalism and are now flowing to the global search engines and social media companies who make no meaningful contribution to the cost of producing the original content from which they so richly benefit.”

On one hand this smacks of special pleading by an industry that has found its business model rendered obsolete within a generation. But on the other there are good arguments that the press should receive special treatment given their democratic role in holding power to account and informing the population. This is also a good time to be trying to extract money from tech giants, following the approval of tough new digital copyright rules by the EU.

Given the virtual impossibility of tracking every news link published on every digital platform, the plan seems to be to come up with some kind of arbitrary license fee, essentially a special tax, and impose it on any tech company that is perceived to be profiting from news stories in any way. This cash would then be handed over to news media organisations according to a formula yet to be determined.

One of the potential variables for determining how much of a kick-back a given title would get could be the highly subjective concept of ‘quality. The NUJ and the regulators all dwell on this a fair bit but seem to all have their own definitions of quality.

“The union believes that the best definition of what constitutes ‘high quality journalism’ is work that complies with the NUJ’s long-established ethical code of conduct and the NUJ’s submission to the review highlights that NUJ members work hard to produce quality content for websites and newspapers in extremely challenging circumstances,” said the full stop-averse NUJ.

“Another problem with the move towards accessing our news online is the proliferation of fake news, often disseminated through social media,” said IPSO. “Without a thriving press, there’s little antidote to online disinformation – and the effect this might have on the public’s ability to participate meaningfully in society should be of concern to us all.”

IMPRESS wants the UK government to “create a new legal identity – ‘Public Interest News’ – for the publishers of high-quality journalism. This identity would be distinct from charitable status, so that publishers could still publish political news and comment, but it would have some of the benefits of charitable status.”

By definition a free press should be unshackled by external quality control. The European Commission has recently indicated it would like to regulate newspapers to prevent them criticising it and campaigning organisations such as Hacked Off (which supports IMPRESS, incidentally), want to restrict the press according to their own systems of weights and measures.

But that doesn’t mean we should ignore this issue. Google and Facebook account for a very high proportion of all ad spend in most places they operate and a lot of the traffic they monetise is driven by content produced by professional journalists. Even alternatives to mainstream media are dependent on tech platforms such as YouTube and Twitter. While this internet tax has many flaws it is at least a reminder to the tech giants that if they don’t do more to ensure a healthy and diverse news media environment, governments might take matters into their own hands.

IBC 2018 – TMT industry must focus on innovation to reignite growth in core services

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Gavin Mann, Global Broadcast Lead for Accenture, offers a preview of the key topics that will define IBC 2018.

As big tech companies move into content creation and distribution, media and entertainment businesses face an unprecedented array of challenges from new competition to the growing purchasing power of the digital native generation.

Established players must safeguard their core business to maintain and nurture the steady reliable cash flow that comes from their legacy and established customer bases, while forging a path to unlock new revenue streams through innovation. As technology continually evolves, there is no finish line and service providers must get used to continual change.

At IBC, disruption in the industry will be the main topic driving conversations at the show. Accenture believes that there are several ways the industry can embrace technology to unlock new innovation and equip businesses for future success, which will be major points of focus at the RAI. Here are more details about each:

Advanced TV Advertising – Making it easier for advertising buyers

Audiences continue to become more fragmented around a growing number of video offerings and the media industry is having a tough time keeping up with measuring viewership and charging for it. While media companies typically try to sell their own ad inventory with proprietary methods, coming together with a single methodology for tracking content and creating niche data sets in a manner similar to what is being done in the online space, may prove crucial to the industry’s future.

Consortiums like Open AP in North America allow advertisers to use a standard group of data sets to define valuable segments of consumers, which could be anything from expectant mums to first-time house buyers. Each company within the Open AP consortium continues to sell its own commercial time and space, but the wider technology offering means advertisers will be able to access specific segments at greater scale.

We expect many execs will be meeting counterparts at IBC to discuss starting or expanding similar data co-operatives in Europe and around the world.

Creating a culture of innovation

Television Understands Innovation: From revolutions in display (black & white to colour, screen formats), to step changes in choice with the entry of non-terrestrial media (satellite and cable), through to the relative explosion of variety as countries transition from analogue to digital, television providers have always combined technology, insight and opportunity to stay ahead. This drive for creative transformation has been a constant, even though in many countries broadcasters and platform operators alike have followed a well-trodden path – from single, national institutions at the birth of the industry to today’s modern competitors. The recent, rapid growth of platform players offering IP-based video consumption has created a new urgency for innovation, driven both by investor perceptions – and reality on the ground.

Investors have bought into the huge future valuations of platform players, who have created scaled global footprints based on new technologies, value chains and business models. Investors remember the slow-to-adapt industries, or those simply on point when the first digital shots were fired. For video to avoid the fates of so many music and newspaper companies, investors expect a strong digital narrative which sets out steps to survive and thrive in this new context.  investors expect established video businesses to articulate clear strategies. They want to see real, sustained innovation along this journey, differentiation and energetic competitiveness.

Established players can, and need to, apply the full force of digital innovation across their entire business, decoupling decision making and operational processes from legacy ways of working. They’ll realise benefits in almost every domain of a traditional video business:

  • Driving revenue growth
  • Finding cost efficiencies
  • Unlocking trapped value to be deployed more profitably

Driving innovation from within lays the strongest possible foundations for the competitive positioning of any video business. It seeks to create a lean, agile culture of rapid innovation and experimentation, which is alive to the major decision points and options in a company’s future.

Changing the innovation culture is a complete journey of transformation that rethinks the operating model, the value tree, skills and core KPIs. Investments to drive growth in the core business must also be capable of underpinning emerging digital ones.

Companies without an innovation story, who don’t change their culture to be able to innovate, will see shareholders lose confidence that they can deliver future value. Established players need to move decisively to apply the full force of digital innovation across their entire business, decoupling decision making and operational processes from legacy ways of working, therefore removing silos from the operating model and workforce.

Will Voice Assistants disintermediate established brands?

The smart home continues to mature significantly as the digital giants, telcos, cable operators, retailers use Voice Assistants as a license to experiment and bring to market new hardware and services. The emergence of voice as an interface, powered by Artificial Intelligence, has seen Voice Assistants impact on marketing grow exponentially as experiences become curated and personalized.

Increasingly, algorithms are performing the role of gatekeeper between consumers and brands, and they are indifferent to the branding efforts that influence buying decisions people make for themselves. This poses a potential problem for brands looking to connect with consumers.  Think what happens when you ask a voice assistant to order some AAA batteries, and what that means for the valuable established brands which still have “prominence” on the supermarket shelf.

Media and Entertainment companies must quickly get a grip on these new algorithm gatekeepers and learn to navigate and engage with them. Many should consider creating collaborative or complementary services on an existing platform to find new ways to prompt their brand and purchases. All will need to consider carefully where a product or service can be designed to make it past the gatekeeper, and how to earn customer loyalty once it does.

Why the media industry should embrace blockchain

As media companies grapple with disruptive market conditions and increasingly demanding customers, blockchain can redefine how they can engage with their customers, partners and broader ecosystems. The first of these industry trends is strategic co-opetition, driven by consumers’ insatiable appetite for content. These ecosystems offer digital trust models ideal for securing rights, remediating financial transactions, sharing the right data, and optimizing the value chain.

One blockchain opportunity in media is to secure data. Media and platform companies have nothing if they cannot protect data and grant access only to those who need it. Blockchain technology is poised to be a game-changer in data security. It creates an auditable trail of an asset whether it is a device, access rights or content. No one owns this history, which creates a new level of visibility and transparency.

Blockchain can reduce piracy by enabling digital rights management—a boon for regulating copyright infringement. It can also make content provenance more transparent by validating authors and granting them access to distribution channels as trusted sources. Imagine the value of this in a world where “fake news” is part of the cultural and political lexicon. And as companies provide customers with their personal data to meet regulatory requirements, blockchain can capture and store a tamper-evident, secure and up-to-date history of personal usage data for better data portability. With so many use cases, blockchain promises to be an unprecedented data security breakthrough for this and many other industries.

Artificial Intelligence Adoption in Media & Entertainment

There is no doubt that AI will be a hot topic at this year’s show. We are moving beyond the phase of everyone talking about it to businesses actually using it to drive business benefits. Yet although it’s gathering pace rapidly, AI is still a new technology and many media companies are still grappling with what is possible and how they can leverage it to deliver true value.

There are many use cases in the industry that we’ll be hearing about spanning from basic automation of back office processes, to automating compliance checks, automated creation/optimization of programming schedules, or even using AI to ingest and interpret complicated royalties’ contracts to assess payments required.

One story we’ll be hearing about at IBC is the topic of content curation. We all know just how important content has become – Disney starting its own streaming service is just one example of media businesses putting content at the heart of their strategies. Together with the right content, any company looking to generate serious growth simply must provide a good customer experience. Artificial intelligence could be part of the answer to next generation content curation. It allows businesses to tailor what they send to individual customers, which would be impossible to do manually because of the sheer volume of content and customers.

 

Gavin Mann AccentureGavin Mann is the Global Broadcast Lead for Accenture. Digital transformation has been at the heart of his work for the last 20 years. Gavin has worked across multiple industries including broadcast, music, movies, gaming and publishing.

Oath boss reportedly edging towards the exit

Tim Armstrong, the boss of Verizon’s media unit Oath, is reportedly discussing terms to exit the business.

The reasons behind the move are unclear for the moment, though, according to the Wall Street Journal, there have been internal disagreements on how to best utilise Verizon’s lofty position in the wireless world to aid the growth of Oath. What does seem to be a frustrating couple of years might be coming to a close for the man who spearheaded Verizon’s efforts to capture digital advertising revenues.

Armstrong entered the Verizon stronghold as a result of the telcos acquisition of AOL, where he was CEO, and since has overseen the merging of AOL and Yahoo to its current Oath livery. What was supposed to be a challenge to the Facebook and Google dominance of advertising revenues in North America has whimpered, with seemingly very little progress being made.

Over the first six month of 2018, Oath contributed roughly $4 billion to the Verizon coffers compared to the $44 billion generated by the wireless unit. According to data from eMarketer, Google accounts for 36.3% of the digital advertising revenues in North America, while Facebook collects 19.3%. Oath collects 2.7% in comparison.

One of the difficulties for the business seems to be a disagreement between Verizon and Oath executives on how to best monetize subscriber data. Sources have suggested Oath employees believe those in the wireless business are being too conservative when it comes to using the data to cross pollinate opportunities for the content and media business. Although there is an opportunity to make cash, the wireless executives are apparently worried about whether such activities would lead to increased churn.

This might well be the case, though some might wonder whether this point was raised prior to Verizon spending $9 billion on acquiring content businesses. The money changing hands is certainly not chump change, and it would be extremely worrying to think these purchases were made without thinking through the practicalities of how a media business would work.

At the time of writing, Verizon has refused to comment on the situation. The fact it has not outright denied the talks suggests there is an element of truth. Perhaps Armstrong is simply tired of dealing with incredibly risk-adverse executives, a perfect stereotype of the telco industry, and is keen to get back into the more adventurous media space.

UK media and telco industries demand more red tape for social media content

A coalition of UK media and telco businesses have written a letter demanding the UK government introduce an independent regulatory oversight of the content carried over social networks.

In the letter written to the Sunday Telegraph, the BBC, Sky, ITV, Channel 4, BT and TalkTalk have attacked unregulated tech giants Facebook, Google and Twitter, suggesting the creation of a new watchdog with the purpose of tackling the increasing presence of abuse and misinformation online is the way forward.

“We do not think it is realistic or appropriate to expect internet and social media companies to make all the judgment calls about what content is and is not acceptable, without any independent oversight,” the letter states. “There is an urgent need for independent scrutiny of the decisions taken, and greater transparency.

“This is not about censoring the internet: it is about making the most popular internet platforms safer, by ensuring there is accountability and transparency over the decisions these private companies are already taking.”

Pressure to more closely regulate the newcomers to the communications game is hardly a new phenomenon; the heavily regulated telco industry has been trying to level the playing fields for years. With the introduction of social media platforms such as Facebook or video content sites like YouTube, stress has been placed on the more traditional communications companies. Whether it is being forced to innovate or having core revenue streams destroyed, digital transformation is much more than an industry buzzword, it is a necessity for survival.

Unfortunately for the telcos, they are largely playing to different rules when it comes to how personal data can be used to deliver these services, while also being held accountable for the vast expense of deploying the all-important communications infrastructure. Any opportunity to have a dig at the digital new-boys will be taken, and this is what this letter seems to be.

This is of course a political pain-point for the social media players right now, and the traditional players are taking full advantage of the situation to rain down some red tape. Governments around the world are grappling with the difficulties of how to govern social media platforms, protecting users from abuse while also maintaining free speech. While there are some very obvious examples of what shouldn’t be allowed, the majority of the time judgement on what posts are acceptable and which are not is a hazy line.

In truth, the social media giants have created the problem for themselves. For years, they positioned themselves as curators of content, not owning or taking responsibility for it, but by creating successful algorithms to personalize feeds and suggested content, they have demonstrated an exceptional ability to influence and control content. Some might ask if they can figure out when the best time to position adverts for car insurance or specific holiday add ons is, why can they not tackle the rising tide of abuse and misinformation?

The answer probably lies in the middle of it being incredibly difficult and contentious, and it is more convenient (financial rewarding) to focus on honing the effectiveness of advertising platforms. Work is being done to try and curb the negative impacts of social media, though whether this is enough to convince the government the segment is capable of self-regulation is suspect.

Boresome bureaucrats never usually need a reason to throw around the red tape, though pressure from the telco lobby might just fuel the anti-social media rhetoric which is currently echoing around the Houses of Parliament.

Ericsson Media Solutions gets a rebrand

Ericsson flogged the majority of its media solutions division to private equity at the start of the year and it has just got around to reflecting that in the brand.

The days of cruel, callous media are behind us, it seems, and henceforth Ericsson Media Solutions will be known as MediaKind. So happy are Ericsson and One Equity Partners with this rebrand that they celebrated with a bunch of live events today, at which a new management team was also unveiled.

There’s a unique type of language used with corporate rebrands – the kind of abstract, aspirational stuff that gets marketing people up in the morning. Here’s a sample:

Designed to embody the concept that media should inspire and unite humankind, MediaKind draws on Ericsson’s 150-year heritage of bringing communities together through pioneering fixed and mobile communications and unites a number of media technology pioneers under one common identity.

It addresses a new age where media is the fabric of society, captivating audiences, changing perceptions and bringing us together. MediaKind’s mission is to lead the future of global media technology and be the first choice for service providers, operators, content owners and broadcasters looking to create and deliver immersive media experiences for everyone, everywhere.

MediaKind CEO Angle Ruiz seems to dig all this marketing talk “We understand the power of media and how it is evolving,” he said. “It runs in our DNA and it’s our passion. With our pioneering heritage and strong foundations fueled by deep innovation, we have a single goal in mind: to enable our customers to create and deliver immersive media experiences.”

And it goes without saying that CMO Arun Bhikshesvaran is all over it. “Media has the power to inspire, influence and be truly immersive – the very embodiment of our exciting new MediaKind brand,” he said.

“Media unites us all and MediaKind is uniquely positioned to drive the human entertainment experience forward for everyone, everywhere. We have the right technologies, an outstanding team and deep media know-how – a combination that will enable us to provide the leadership our customers need during a period of great transformation to a new multi-screen, on-demand and immersive world of entertainment.”

Analyst Paolo Pescatore was there and hopes the rebrand will be more than skin deep. “Finally, the unit can get on it with business,” he said. “This represents a new start and it must deliver. No more second chances. Arguably, the unit should be well placed to exploit the opportunities in convergence underpinned by the growing demand of video usage. The equity firm can ensure a commercially minded focus, while it can still rely on Ericsson’s vast technical expertise and huge connections to thrive.

“There will be obstacles that it still needs to overcome. In particular regaining trust among existing and new customers. The new brand and future plans will go some way to restore confidence and rebuild credibility with the burgeoning media and telco industries.”

That’s about it for now, apart from the full new management team and, of course, a slick video. Here they are:

  • Angel Ruiz, Chief Executive Officer
  • Gowton Achaibar, COO & Head of R&D
  • Heather Andrade-Neumann, Chief People Officer
  • Arun Bhikshesvaran, Chief Marketing Officer
  • Misty Kawecki, Chief Financial Officer
  • Mark Russell, Chief Technology & Strategy Officer
  • Sven Bolthausen, SVP Commercial Management & Sales Support
  • Alex Borland, SVP EMEA Sales
  • Clayton Cruz, SVP Latin American Sales
  • Steve Payne, SVP North America Sales
  • Ken Yap, SVP North East Asia Sales

Telecoms and media industries driving the highest M&A year ever

M&A deals involving telecoms and media companies in 2018 has registered a historic high of over $300 billion, six times higher than last year.

According to data from Thomson Reuters, the published value of proposed mergers and acquisition deals globally has totalled $2.5 trillion this year, beating the previous high of $2.3 trillion in the same period in 2007, the year before the global financial crisis. This is also 64% higher than 2017.

The biggest boost has come from the media industry, which has reported a value of $322.5 billion. In Europe, which contributed to close to $0.8 trillion to the market, next only to the US, three out of the eight biggest M&A deals this year take place in the media industry: Comcast’s and Walt Disney’s acquisition of Sky, with a combined value of $65.6 billion, and Vodafone’s $21.8 billion acquisition of Unitymedia GmbH.

One driver behind the vibrant media (as well as telecom and technology in general) M&A market is the fast technology progress, in particular internet and cloud-based services. “Businesses that take a ‘cloud first’ approach are often able to achieve fast organic growth, which puts them in a strong position for acquisition, either of a company or by another company,” said Paul Landsman, Investment Director at Livingbridge.

The business dynamics of industry are also in constant change, even the definition of what qualifies as media companies. The US federal judge has recently given green light to AT&T’s $85.4 billion acquisition of Time Warner, dismissing the government’s argument that the deal would be anti-competitive. This is largely down to the fact that more consumers are “cutting the cord” and switch to services like Netflix and Amazon.

This has brought about a change in the business relations between telecom companies like AT&T and content providers like Netflix. While in the past the content companies would pay telcos to transport the content, through its vertical integration, AT&T itself is becoming a media company competing with most likely its biggest client. Netflix is taking up 20% of the world’s downlink bandwidth. And this is calculated when it is not even operating in China.

Consequently, a new kind of question is being asked of the regulators. While the cable networks are losing their grip on viewers, hence the lack of concern for monopoly of the future AT&T / Time Warner combination, the Internet is increasingly being dominated by the so-called FAANG (Facebook, Amazon, Apple, Netflix, Google).

The financial capacity of these giants dwarfs any conventional media company. Netflix is planning to increase $3-4 billion investment in original content next year, on top of its already jaw-dropping $12-13 billion this year. The incremental amount is already bigger than the BBC’s total programming budget, according to a recent analysis of the company done by The Economist. The regulators need to consider how to protect the consumers that cannot or are not willing to subscribe to the premium over-the-top (OTT) services.

This is further complicated by the issue of net neutrality, or the lack of it. In markets where there is no legal requirement for net neutrality, regulators may have a hard time guaranteeing consumers receiving basic services from telcos who have a conflict of interest in transporting all media content including that of its own.

Though there is no sign of market cooling down yet, factors outside of the financial market may play some critical roles in the future M&A decisions. The on and off and on again US sanction against ZTE (and implied investigation of Huawei), and China’s drawn-out process to approve Qualcomm’s proposed acquisition of chipmaker NXP Semiconductor are the most recent and most obvious examples. They may lead potential acquirers and targets to be more cautious when it comes to companies with significant business interests in sensitive markets.

AT&T reviews Time Warner acquisition and updates Q2 outlook

AT&T execs took the opportunity to provide a general corporate update at the recent Wells Fargo Securities 2018 Telecom 5G Forum.

The main bit focused on a recap of the rationale and outcome of the Time Warner acquisition. It is the culmination of a strategy to build a modern media company around four critical elements, announced CEO Randall Stephenson and CFO John Stephens. Those elements are:

  • Premium content with wide distribution. HBO, Turner and Warner Bros. combined with targeted digital properties like Bleacher Report and AT&T’s investment in Otter Media have the potential to drive viewer engagement to new levels.
  • Direct-to-consumer relationships. AT&T has more than 170 million D2C relationships across wireless, video and broadband, which provide valuable insights on how the company delivers content, what content it distributes and how it distributes that content.
  • Advertising technology. AT&T’s D2C relationships give the company insights regarding what customers are watching, where they’re watching it and at what times they’re watching. These insights can create incredible value for advertisers.
  • High-speed networks. These networks must be able to deliver premium content to whatever screen the customer demands at the lowest cost per megabyte possible.

There was inevitably lots of talk of synergies and Stephenson seems to be especially excited about the advertising opportunities now available to AT&T, where other lovely massive M&A concepts such as scale, efficiency, reach, etc come into play. They will build a real-time exchange for premium video advertising coordinated across mobile devices and TV screens which, as we’re seeing, is a nice earner.

In other news AT&T reiterated its desire to reduce its debt (not doing anymore M&A for a bit might help), and says a lot of its capital-intensive projects, such as US fibre and Mexican LTE, are already well underway. It also reckons there will be some nice savings from all its SDN investments, that the strengthening dollar will hit its international revenues and that wireless revenue growth will be flat.

AT&T wastes no time in completing Time Warner acquisition

A mere two days after a judge rejected the US government’s attempt to block it, AT&T has completed its $85.4 billion acquisition of Time Warner.

The giant US telco is now the owner of some of the biggest properties and brands in the media world. HBO is arguably the number one producer of premium video content, responsible for Game of Thrones and Westworld as well as all-time classics The Wire and The Sopranos. Turner owns a bunch of major broadcast TV channels including CNN and Cartoon Network, while Warner Brothers is one of the big movie studios.

“The content and creative talent at Warner Bros., HBO and Turner are first-rate,” said AT&T CEO Randall Stephenson. “Combine all that with AT&T’s strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience. We’re going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers.”

The strapline for the press release announcing the completion of the deal announces: “Positioned to be a Global Leader as a Modern Media Company. Set to Create the Best Entertainment and Communications Experiences in the World.” This chimes with the contemporary trend towards mutliplay and sets AT&T up as the big beast of this space.

The Time Warner name, which can be traced back to the launch of Time magazine in 1923, will now cease to exist. AT&T is adding a new super-silo to its corporate structure to accommodate these new media assets, alongside its communications, international and advertising business, but has yet to pick a name for it. You would presumably get short odds on ‘AT&T Media’.

That silo will be led by AT&T lifer John Stankey, who took over the AT&T Entertainment Group that was created to house DirecTV when it was snapped up for $50 billion or so in 2015. He’s going to get a crash course in running a media empire from former Time Warner CEO Jeff Bewkes during a transition period of unspecified length.

“Jeff is an outstanding leader and one of the most accomplished CEOs around,” said Stephenson. He and his team have built a global leader in media and entertainment and I greatly appreciate his continued counsel.”

There are only two larger media companies out there: Comcast and Disney, who are currently in a bidding war for Twenty-First Century Fox, with the former outbidding the latter to the tune of 19% earlier this week by offering $65 billion, apparently hastened by the AT&T development. Fox, meanwhile has trying to buy Sky for ages, a process also complicated by Comcast’s gazumping tendencies.

The US seems to be feeling pretty laissez faire about massive comms/media consolidation but Europe might yet have something to say about all this. The Fox/Sky acquisition has been mainly held up by concerns about media plurality in terms of TV news and the more of this sort of M&A happens the more questions like these will be asked.

US government loses court case to block AT&T acquisition of Time Warner

A US Judge has ruled that a case brought by the US government to block AT&T’s acquisition is without merit, so the deal can go ahead.

“We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner,” said David McAtee, AT&T General Counsel. We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”

So that seems to be that. AT&T can go ahead and buy the company that owns Warner, HBO, etc, for $85 billion, and immediately make itself one of the world’s leading content producers. The main reason behind the US government action was concern about both the content and the means for its delivery being owned by the same company, thus creating the potential for consumers being held to ransom by making access to one conditional on paying for the other.

U.S. District Court Judge Richard Leon decided the US government had failed to prove the acquisition would harm competition and you can read his lengthy reasoning below. But that doesn’t mean there won’t be plenty of opportunities for AT&T to abuse the dominant position this acquisition will put it in. Regulators will need keep a close eye on the situation to make sure that people aren’t obliged to buy massive AT&T bundles just to get hold of Game of Thrones.

There are also broader implications for industry consolidation. Now that the legal precedent has been set, expect other communications and media giants to start casting sidelong glances at each other. “Judge Leon’s decision in AT&T/Time Warner, which forcefully rejects all of DOJ’s proposed theories of vertical harm, makes it much more difficult for the government to challenge future significant vertical mergers,” said Logan Breed, Partner in the Hogan Lovells antitrust team. “This will have an effect on potential future combinations of content providers and content creators, as well as pending mergers in other industries, such as CVS/Aetna.” Light Reading has some more analysis on that side of things here.

 

U.S. District Court Opinion on AT&T by CNBC.com on Scribd

UK Government confirms Fox can bid for Sky as long as it flogs Sky News

A protracted assessment of Twenty-First Century Fox’s desire to acquire the 60% of Sky it doesn’t already own has concluded something needs to be done about Sky News.

The concern is that giving Rupert Murdoch-owned Fox control of Sky would negatively affect media plurality in the UK because he already owns a bunch of newspapers. So the Secretary of State for Digital, Culture, Media and Sport, Matt Hancock, has concluded the acquisition process can only proceed if Fox finds an alternative, independent home for Sky News.

“I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified,” said Hancock.

“The CMA report sets out some draft terms for such a divestment, and Fox has written to me to offer undertakings on effectively the same terms. The proposals include significant commitments from Fox. But there are some important issues on the draft undertakings which still need to be addressed.

“I need to be confident that the final undertakings ensure that Sky News:

  • remains financially viable over the long-term
  • is able to operate as a major UK-based news provider
  • and is able to take its editorial decisions independently, free from any potential outside influence

“As a result, I have asked my officials to begin immediate discussions with the parties to finalise the details with a view to agreeing an acceptable form of the remedy, so we can all be confident Sky News can be divested in a way that works for the long term.”

There is, of course, another major potential spanner in the works for Fox and that’s the arrival of US broadcast giant Comcast on the scene with a higher bid a month or so ago. Hancock hasn’t got any issues with Comcast so Fox will need to not only deal with Sky News but outbid Comcast if it’s going to achieve its UK ambitions. All of this is good news for Sky shareholders.

“Sky welcomes today’s announcements by the Secretary of State regarding the proposed offers for Sky by 21CF and Comcast,” said a Sky corporate announcement. “In respect of 21CF’s proposed acquisition of Sky, Sky notes that the Secretary of State considers that the undertakings provided by 21CF have provided a good starting point to overcome the adverse public interest effects of the proposed merger that he has identified, and that DCMS Officials have now been instructed to seek to agree final undertakings with 21CF.

“The Secretary of State has stated that, dependent on the outcome of these discussions, he would hope to be in a position to consult on any agreed final undertakings within the next two weeks. Sky also notes the Secretary of State’s final decision not to intervene on public interest grounds in relation to the Comcast offer for Sky.”

All of this is good news for Sky shareholders. It’s hard to imagine Fox throwing in the towel now, after all the hassle it has taken to get to this point, and it’s equally hard to imagine Comcast bailing out after just one counter-offer. Having said that today’s decision seems to have been priced in, with Sky’s share price not having moved much since Comcast first indicated its interest at the end of February.