AT&T and Time Warner tough talk continues as Stephenson warns cable to ‘watch out’

by Daniel Frankel | Oct 27, 2016 11:05am

Taking a bow shot at cable as he plugged his company’s proposed $85.4 billion takeover of Time Warner Inc., AT&T CEO Randall Stephenson warned the cable industry to “watch out.”

“We aim for nothing less than competing with you head-to-head throughout the country on cost, quality and choice,” Stephenson said in a memo sent out to the staffs of both AT&T and Time Warner, Inc. Wednesday. (The memo was obtained by Deadline Hollywood.)

“Our acquisition of DirecTV is already helping us deploy fiber to 12.5 million U.S. homes,” he added. “Now, if we can ignite the next revolution in mobile video, it will give the entire wireless industry confidence to deploy ultra-fast 5G technology more aggressively, bringing ‘new pipes’ and new choices into consumers’ homes across the country.”

Stephenson’s comments came after Time Warner CEO Jeff Bewkes, in an interview with the Financial Times, warned other media companies like Disney and Fox to not challenge the merger. He said the partnership between AT&T and Time Warner would lead to new products and services that will benefit customers across the entire ecosystem.

In his memo, which actually covered a broad range of topics and addressed numerous constituencies, Stephenson addressed “all officers” of both companies, explaining, “We entered this transaction for many reasons, but those reasons all boil down to one thing – we want to get the most content to the most people at the lowest prices, delivered on any screen, particularly mobile. We are convinced that this merger will change the game in video by bringing innovation and investment to a media industry that is begging for both and to consumers who want a better video experience.”

For consumers, he said, “We know you want more than what the industry is giving you today. That’s why we are launching DirecTV Now, our 100+ channel, 100 percent over-the-top product that is aggressively priced with packages beginning at $35 a month. Looking ahead, we will use our digital rights in Time Warner’s content to create new choices – skinnier bundles, video created just for mobile viewing and social media, and low-cost video products supported by advertisers instead of consumers. More choice; lower cost.”

He also addressed CNN executives and staff, promising to respect the “editorial independence” of the cable news network. “We will not do anything to change that,” he said.

Stephenson also told other content companies that AT&T will use Time Warner content as a “launching pad” for new, mobile first packages. “We think Time Warner will help us persuade you and other providers to join these offerings,” he said. “And when we innovate, we think others in the industry will innovate and experiment, as well."