Content is no longer king for US telecom giants, Digital Platforms & Services

AT&T is praised by investment analysts for making good progress in its telephony and connectivity business as its rapidly declining former “media” business fades as a result of its “unroll” strategy. Earlier this year he said goodbye to his old content strategy (well 6 years at most) under which he had bought a bunch of media properties including DIRECTV and Time Warner. A new company was created and integrated DIRECTV, AT&T TV and the U-verse video service.

AT&T was therefore largely free of those cash-draining assets that together represented perhaps the worst telecoms investment strategy ever.

Could he now show that he had the capacity to equip himself with his house of connectivity in order to regain some lost ground?

In fact, it seems to have performed quite well so far, seeing the biggest jump in cellphone customers in over a decade in the last quarter. And its “mobility” revenue grew 7%, the company said in its recent earnings call, with its mobility EBITDA up nearly $ 300 million or 3.6% for the year thanks growth in service revenues and processing economies, according to AT&T CFO. , Pascal Desroches.

Run away!

AT&T wasn’t the only telecommunications giant to take a new direction this year. In May, Verizon announced that it was also selling its media business, after spending $ 9 billion to buy Yahoo and Internet Age AOL over the hill to form the core of its digital media effort (qu ‘she originally loaded with the name Oath). Verizon announced the sale of its Media business to US private equity group Apollo Global Management for $ 5 billion (it had bought the “properties” for about $ 9 billion – AOL cost it $ 4.4 billion in 2015; Yahoo cost $ 4.48 billion in 2017).

Sounds bad, but AT & T’s money splash was huge. It bought Time Warner (the parent company of CNN, HBO and Warner Brothers) for $ 85.4 billion in 2018!

So why the collective madness shown by the American giants? It wasn’t as if there weren’t many voices warning against the wisdom of entering a completely different company with its own culture, capital requirements and risk profile, for the Most diametrically opposed to the way the telecommunications and networking industry has traditionally run on their own… there was.

But at the root of this debate was a question that had been floating around for at least two decades.

Content or connectivity

What was the most important (and ultimately most valuable) content or connectivity?

By the start of the last decade, the telecommunications industry had convinced itself that content companies walked away with profits online and that they, not OTT players, needed to take a stand on content to fix the problems. This belief was clearly part of AT&T and Verizon’s motivation to seek at least a presence in content to provide the ability to create powerful synergies between network and applications such as video.

What ‘content or connectivity? The question has dragged around our great annual Telecommunications Debate (GTD) pretty much every year so far. Luckily, the next GTD is fast approaching (December 9) and as part of the agenda, Chris Lewis, the initiator of GTD, will take a look at past debates to see how the debate on the content and connectivity has evolved. years. Has the industry reached a new understanding – like Verizon and AT&T seem to have done?

“There have been a few big pushes (by telecoms operators) in the media and we can now see that this has been a step too far, ”says Chris. “Competition is now fierce at all levels and this has once again set the telecommunications operators back. »See you at the Great Telco Debate.

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