Why AT&T Needs Time Warner to Transform Its Business

By Nicholas Economides

Headshot of Nicholas Economides

All things considered, the most remarkable piece of news is that the new AT&T will be a media production and distribution company, having radically transformed itself from a regulated utility.

The telephone company has suffered through bad acquisitions over the years.

With this week’s announcement to acquire Time Warner, AT&T is adding to its history of acquiring new businesses in hopes of becoming a media company. The company’s large presence in video distribution through the Dish satellite network, as well as its landline-based video distribution network (U-verse), combined with Time Warner’s extensive content production and cable and pay-per-view channels clearly supports this repositioning.

Before we laud AT&T for its efforts to transform its business (again), we should first understand the company’s often-costly history with acquisitions.

Most people know A&T as “the” telecom company. Strictly regulated until 1981, it celebrated huge triumphs with its subsidiary Bell Labs. The invention of the transistor and the integrated circuit are the basis of all computer electronics.

Read the full article as published in Fortune.

Nicholas Economides is a Professor of Economics.