AT&T chief Randall Stephenson claimed the approval process for its mega $85 billion acquisition of Time Warner would be “fairly straightforward”, while detailing how the combined business will open up new opportunities to innovate on content and compete in advertising against the likes of Facebook and Google.

Speaking on a conference call, the executive said that “it’s very clear that this qualifies as a vertical merger”, with the companies providing complementary, rather than competitive products. “All of the deals that have gotten into trouble have been horizontal”, he continued, which have prompted fears that competition in the market would be reduced.

While a vertical partnership is likely to pose some questions by rivals, the belief is that this can be addressed by conditions imposed on the deal, rather than blocking the whole transaction. “We anticipate there may be some conditions,” Stephenson cautioned.

Randall StephensonThe AT&T chief also admitted that as AT&T has worked to bring its DirecTV Now service to market (following its $48.5 billion acquisition of DirecTV last year), some work with content providers has proved “really, really hard”, particularly with regard to the new distribution deals which have had to be put in place.

With the desire to make content clipable and sharable among increasingly mobile and social customers, having content provision under the same umbrella means “we can begin to innovate on content much quicker”, Stephenson claimed. “When it’s owned, you can move a lot faster.”

With DirecTV Now set to launch soon, as the product is developed “the more excited we get about what we will be able to do on the platform”, Stephenson said. “The timing of the Time Warner deal as it fits with DirecTV is actually very good.”

Rivalling Facebook and Google
Both the AT&T boss and Jeff Bewkes, chairman and CEO of Time Warner, talked-up the potential of the combined business to provide access to “robust” viewership information, which can be used both to enable data-led content creation and to provide value to advertisers, enabling the creation of “two-sided” business models – subscription and advertising.

“The benefit for consumers is very good, the benefit for advertisers is tremendous,” Bewkes said – highlighting the emergence of a potential advertising proposition which can rival online companies such as Google and Facebook.

And as AT&T becomes an integrated media and communications business, Stephenson noted the importance of network evolution. “We would probably have a desire to move faster on 5G, and certainly not slower.”

The deal was described as a “bolt-on” acquisition, meaning Time Warner will continue to operate largely as it does already, without any large-scale integration.  There is an annual savings potential in the $1 billion range for the combined business, focused around areas such as corporate and procurement alignment (Time Warner is not currently a big AT&T customer, for example).

But it was pointed out that job cuts are not a focus as part of these savings.

Editorial independence
AT&T also pledged to maintain editorial independence once the deal goes through. “Our intent is to operate Time Warner as it operates today, with autonomy in its divisions, including the world-class creative talent and journalists that make Time Warner a leader in entertainment and news,” Stephenson said in a statement.

This includes its CNN news organisation, which the AT&T chief described as “an American symbol of independent journalism and First Amendment free speech”.