In the internet age, consolidation is an attractive option for large telecom companies. Wireless carriers want in-house content to draw mobile users, and media producers want digital distribution. That’s why, on Saturday, AT&T revealed plans to purchase Time Warner for $85.4 billion. And the acquisitions likely won’t stop there, analysts say.
“The takeout target over the next twelve months has got to be T-Mobile,” New Street Research analyst Spencer Kurn told Reuters.
T-Mobile, the third largest wireless carrier in the United States, would make an attractive purchase. The company accounted for most of the industry’s subscriber and revenue growth in the third quarter, and shares have jumped 9.5 percent since Monday. And there’s no shortage of potential buyers: Comcast, Dish Network, and Mexican telecom company America Movil may show renewed interest in T-Mobile in the coming months, say analysts.
Public perception of the media industry is becoming increasingly negative. Only 32 percent of Americans say they have a “great deal” or “fair amount” of trust in the mass media – an 8 percent drop from just one year ago – according to a recent Gallup poll.
Meanwhile, large-scale media acquisitions continue in spite of antitrust regulators. In 2013, Comcast took NBCUniversal in a $17 billion deal. A year later, Time Warner bought cable TV provider Charter Communications for $38 billion. Last year, AT&T snapped up DirecTV for $48.5 billion.
But what does that mean for consumers?
Mergers "can be a mixed bag," The Christian Science Monitor’s Schuyler Velasco reported in May 2014, as AT&T was pursuing a DirecTV deal:
In general, fewer companies means less competition and the potential for one company or another to completely dominate a given market. That’s something antitrust regulators looked to prevent, in fact, when they blocked a potential purchase of T-Mobile by AT&T in 2011.
But big mergers may also benefit consumers, analysts say. Consolidated telecom giants, such as the new AT&T, tend to dominate certain regional markets. By teaming up, media producers and wireless carriers could compete in those same spaces. That’s why prices may actually drop, if and when T-Mobile is purchased.
“If we as consumers have the choice for either AT&T or Verizon or CenturyLink or Comcast or whatever in the same space, that will drive innovation, and drive prices down,” media industry analyst Jeff Kagan told the Monitor in 2014. “There is a growing level of competition that there wasn’t 10 years ago.”
This report includes material from Reuters.