Business

AT&T CEO says Time Warner merger is all about ads

AT&T’s acquisition of Time Warner is all about making ads more effective and profitable, AT&T CEO Randall Stephenson said Tuesday.

What’s truly promising about the $85.4 billion mega-deal announced last fall — and “what people miss,” according to Stephenson — is that, with the help of AT&T’s technology and user data, targeting audiences will no longer be the hit-or-miss exercise of TV’s analogue era.

Instead, Time Warner content including HBO will soon offer the same audience-targeting capability that “advertisers can get on the digital side,” Stephenson said in a wide-ranging Q&A that kicked off Goldman Sachs’ 26th annual Communacopia conference.

“You can control where it shows up,” Stephenson explained — and can be priced two to three times higher than what Time Warner obtains as a stand-alone.

The CEO, who expects the merger to close by year’s end, further suggested that Time Warner management stands to benefit from AT&T’s data insights in terms of production decisions — up to a point.

“I don’t think Steven Spielberg can be replaced by Big Data,” he admitted.

As for current video offerings, Stephenson said the $100 or so monthly price of the traditional TV bundle is making AT&T’s DirectTV Now a favorite among the 20 million or so millennials and others in America’s cord-cutting segment.

The new offering’s $30-to-$60 bundles of mobile content attracted a half-million subscribers by the end of the second quarter, he said, and is helping to take down the wireless carrier’s churn rate to a record low.

Elsewhere, Stephenson griped that America’s current tax rate of about 45 percent, including state and local tariffs, is “just not competitive.”

Claiming that AT&T is “the largest investor in America,” Stephenson said US investment rates by business are limping along at their lowest level since World War II.

Europe’s 25 percent corporate tax gives the Continent a big advantage, but the Trump Administration’s targeting a 15 percent rate, if successful, would give the US an even bigger one, Stephenson said.

“A lower rate would mean higher investment and higher economic growth,” he said. And if a lower rate is not achieved by year-end, he added, “it will be a shame.”