AT&T promises fewer ads, tailored programing after merger

By Lisa Richwine

LOS ANGELES (Reuters) – AT&T Inc <T.N> is promising fewer commercials, smaller channel bundles and personalized programming now that it has taken over Time Warner channels in an $85 billion mega-merger.

After overcoming the U.S. Justice Department’s objection that the deal would harm competition, AT&T, the country’s number two wireless operator, said it will use its technology to reinvent how consumers receive and view entertainment.

A major aim is to reduce the number of commercials now that customers are accustomed to ad-free services such as Netflix Inc <NFLX.O>, said John Stankey, chief executive of newly named AT&T unit WarnerMedia.

“One of the big benefits we can bring to the market is lighter ad loads,” Stankey told Reuters in an interview.

AT&T, long dominant in the U.S. telephone industry, is now at the forefront of Hollywood with its purchase of Time Warner, which owned HBO, the Warner Brothers film and television studios, and Turner Broadcasting and CNN.

AT&T plans to use mobile phone and video data, supplied by customers who have given permission, to sell targeted advertisements. The thinking is that brands will pay more if they know their message is reaching someone likely to be interested in it.

For example, “if I’m a beer drinker, I’m more interested in seeing things about beer than soft drinks,” Stankey said.

Some of Time Warner’s Turner networks already have cut the number of commercials. Comedy network TruTV, for example, has reduced ad time by roughly 50 percent.

AT&T “absolutely” should be able to further reduce ad inventory across Turner networks, Stankey said.

AUTOMATED MARKETPLACE

The company will start selling targeted ads for Turner networks such as TNT and CNN “in short order,” Stankey said.

An industry-wide, automated marketplace, which would sell ads across other companies’ channels, would require cooperation across multiple players, and Stankey acknowledged that remains “easily a year off.”

The Justice Department and other critics had argued that AT&T’s purchase of Time Warner would harm consumers by limiting competition and leading to price increases. But a U.S. judge disagreed, and AT&T completed the merger last week. The government still may appeal.

AT&T now owns popular properties such as “Game of Thrones” along with the Harry Potter and Wonder Woman franchises. In the coming days, it will launch AT&T Watch, a package of Turner networks plus some from other media companies, Stankey said.

Designed as a general entertainment package that is smaller than traditional cable bundles, AT&T Watch will not carry sports-specific networks, Stankey said.

AT&T also plans to tailor programing to customer interests, such as by sending CNN news clips to mobile phone users based on their interests, or alerts about types of programing they might like based on earlier viewing, Stankey said.

Customers of HBO’s online services should not expect any immediate change to the company’s stance on password sharing, Stankey said. HBO limits the number of simultaneous streams but has accepted that some password sharing will occur.

AT&T is comfortable with password sharing among family members and believes most cases occur among people with a close relationship to someone who pays for the service, Stankey said.

“If somebody becomes really passionate about doing something through password sharing, and at some point they get hooked on it, they move into being a paying subscriber,” he said.

(Reporting by Lisa Richwine; editing by Bill Tarrant and James Dalgleish)