AT&T losing subscribers
AT&T (T) has been losing traditional wireless service subscribers due to the growing popularity of OTT (over-the-top) video streaming services such as Amazon (AMZN) Prime, Netflix (NFLX), and Alphabet’s YouTube. The company is also facing a price war with Verizon (VZ), which is hurting its customer base. In 1Q18, AT&T lost ~188,000 satellite TV customers and added 1,000 U-verse TV customers.
Merger with Time Warner could benefit AT&T
Amid a declining pay-TV subscriber base, AT&T believes that its proposed merger with media company Time Warner (TWX) could diversify its business. The planned $85 billion acquisition of Time Warner’s media assets, including HBO, Turner Broadcasting, cable networks TNT, TBS, and CNN, and a minor stake in Internet video provider Hulu, could grow the company’s revenue through content distribution. AT&T could also create new online videos using high-quality Time Warner media content and sell ads at a higher rate, boosting AT&T’s targeted advertising business.
AT&T-Time Warner merger facing lawsuit
The proposed AT&T-Time Warner merger, announced in October 2016, has faced several delays, namely an antitrust lawsuit filed by the US DoJ (Department of Justice) to block the deal. AT&T and the DoJ have made their closing arguments and now await district judge Richard Leon’s decision. According to a recent filing, the companies have set their merger deadline for June 21.