[ad_1]
After a summer of negotiations, AT & T and Comcast investors are looking for clues that the spending craze was worth it.
AT & T finally finalized its $ 85 billion takeover of Time Warner in June, turning it into a media conglomerate. And Comcast is getting closer to its $ 39 billion acquisition of Sky Plc after overcoming a competing bid from 21st Century Fox Inc.
The two agreements were partly aimed at contributing to the defense against Netflix, which has just announced a sharp increase in the number of subscribers in the last quarter. AT & T and Comcast are the two largest pay-TV providers in the United States. They are therefore the most vulnerable to consumers abandoning cable bundles and streaming services.
With Comcast, AT & T and telecom giant Verizon Communications all ready to release their Q3 results this week, investors will look to ensure their companies have adapted to the new realities.
"Old business models based on over-rated bundle content are collapsing before our eyes," said Todd Lowenstein, chief equity strategist at Highmark Capital, of Union Bank, which owns the shares of Comcast, the United States. AT & T and Verizon. "It's clear that distributors are stepping up their activities to combat newcomers who are encroaching on their increasingly thin ditches."
A quick look at Netflix's growth, with its 7 million surprising new subscribers in the third quarter, and the kind of pressure exerted by the country's major pay-TV providers. By the middle of the year, AT & T had lost 474,000 satellite TV subscribers and 236,000 subscribers had left Comcast, thanks largely to Netflix, Hulu and the growing list of online viewing options. less expensive.
Comcast and AT & T have the most to lose in the changing landscape of pay TV. It is therefore not surprising that they have considered acquisitions to strengthen their businesses.
While radio has survived the rise of television, television will survive the rise of online streaming, said Comcast President and CEO Brian Roberts at an investor conference last month. . "We do not subscribe to the all-or-nothing theory," Roberts said.
In addition to expanding geographically by taking over Sky's television and studio operations in the UK, Comcast has also accelerated the speed of its fixed network to help sell more high-speed broadband services here in the United States. Last year, the cable giant began selling wireless service to customers, looking for closer links to promote subscriber loyalty.
Comcast announced Monday that it would devote an extra half hour to this week's teleconference to discuss the Sky transaction.
Verizon, the largest wireless operator in the United States, is content to watch the megadores aside. Under the new head Hans Vestberg, the company is redoubling its efforts to expand its network and defeat rivals with 5G services.
For AT & T, the strategy of fighting Netflix is very much like Netflix's attempt. Undeterred by the Justice Department's ongoing efforts to end its contract with Time Warner, AT & T has presented major plans to directly deliver the content of its new name, WarnerMedia, to consumers. AT & T has announced that it will start selling video packages online by the end of 2019, using popular properties such as HBO, Turner shows and live sports events.
"The theme is reinvention," said Amy Yong, an analyst at Macquarie. "They probably want to recreate a Netflix style model with a focus on sports content."
The biggest question for investors is what AT & T and Comcast will do to compete with FAANG, said Yong, referring to Facebook, Apple, Amazon, Netflix and Google.
Each of these technology giants ventured, one way or another, into the video. In the case of Google and Facebook, they also collected billions of dollars in advertising from traditional media such as publishing, radio and television.
By strengthening their businesses with more satellite and Internet distribution while adding extensive content libraries, AT & T and Comcast may have improved their chances, Highmark's Lowenstein said.
"An optimistic view suggests that it will give them time to adapt," he said.
Bloomberg's Gerry Smith contributed.
Source link
