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Threatens net neutrality and gives AT&T incentive to make it harder for non-Time Warner content creators to access AT&T customers.
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We have always supported an open internet.
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There's been no suggestion that we would prevent other content creators from getting their content to our customers; that would be counter-productive to our commitment to providing the best of all content to our customers.
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I think what you may be trying to ask is whether it will be harder for other distributors to get Time Warner content after the transaction closes. Assuming that's the case, I'll tell you that:
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The FCC has had net neutrality rules in place since March 2015. Those rules were upheld by the US Court of Appeals in June of 2016. While we don't agree with all aspects of FCC's position, this deal doesn't change anything.
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When addressing the transaction at conference on Tuesday, AT&T Chairman and CEO addressed this very issue, saying that the "number one guiding principle" of this transaction is that "Time Warner will continue to distribute their content widely and broadly. They've built a franchise on wide and broad distribution that's going to continue."
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We've also made it clear that doing it any other way wouldn't make economic sense. Time Warner has created an amazing franchise and business by distributing their content across all kinds of distributors and we see that as a big part of Time Warner's value both now and going forward.
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AT&T will have even more information about me as an individual subscriber because it will receive all of the user data now held by Time Warner. AT&T will use that data to benefit advertisers to target me.
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It's important to recognize that AT&T has a clear privacy policy around the use of customer insights. We use customer insights to create aggregate audience segments based on non-personally identifiable information about customers (like age, ethnicity, income range, a particular geographic area, and their interests) to serve advertising that is more likely to be useful to those audience segments.
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Owning content will help AT&T innovate on new advertising models which, combined with subscriptions, will help pay for the cost of content creation. This two-sided business model – advertising- and subscription-based – gives customers the largest amount of premium content at the best value.
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Overall, the combined company will be able to deliver a better customer experience through improved and enhance content, data, distribution and technology.
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In past mergers (esp. Cingular) AT&T has not kept its promises; can't be expected to keep promises now.
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We have a history of honoring our commitments. We've done so with previous transactions and will do so with this one.
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Previous transactions, including the acquisition of DIRECTV last year, have brought significant benefits to our customers, and, following this transaction, the new company will be a stronger competitive alternative to cable and other video services (like Netflix) and will provide greater value and choices for customers.
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Even though it is a vertical merger (which you guys have said many times) it ultimately will weaken competitors which ultimately will lead to less consumer choice.
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This deal will result in more competition for cable TV and other video providers.
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We are on the cusp of the next wave of innovation in video, but it takes the right company to make it happen. Time Warner's content will allow us to offer new, innovative digital video services across multiple platforms. That will spur others to innovate as well, all for the benefit of customers and making us a stronger competitor to cable.
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Gives AT&T more power to raise prices, esp. after competitors are weaker.
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This deal will result in more competition for cable TV and other video providers.
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And more competition generally leads to lower prices for consumers.
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Earlier this week, AT&T Chairman and CEO Randall Stephenson announced the pricing of DIRECTV NOW, the new OTT service set to launch next month.
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That's why we're launching DIRECTV Now, our 100% over-the-top product that is aggressively priced with packages beginning at $35/month.
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Looking ahead, we'll 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 consumers. More choice; lower cost
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Randall called it a "game changer" and we see it as an indicator of the new, innovative digital video services we'll be able to offer and the value at which we'll be able to do so.
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Will taking on debt for this deal mean that rates for AT&T customers won't be lower and may have to be raised to cover the additional debt?
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We expect this transaction to be accretive to adjusted earnings and free cash flow in the first year after close. This will improve our FCF dividend coverage.
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We also expect that with the additional free cash flow from Time Warner, we'll be at a 2.5x net-debt-to-EBITDA ratio by the end of the first year after close, with plans to return to our historical target range within 4 years after close.
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Beyond that, I'd refer you to our earlier response regarding pricing and customer benefits.
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How exactly will this deal increase competition?
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As we roll out more packages and more choices for consumers at different price points and levels, we believe we'll spur competition in distribution, content creation and advertising.
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Other distributors have been slow to innovate in the mobile video arena. With the launch of DIRECTV Now, we'll have a new over-the-top model to deliver premium video on mobile devices like no one else.
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Then we plan to offer more customized subscription packages to consumers and more effective targeted advertising to advertisers.
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And as we demonstrate success with Time Warner content delivery over the top, other content creators will look to innovate for new delivery platforms like DIRECTV Now.
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And with this innovation across distribution and content, we'll be a stronger competitive alternative to cable and to other video services, like Netflix. And advertisers will have a new competitive outlet to deliver addressable advertising beyond Google and Facebook.
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