Spectrum bought by AT&T? Not quite.

Was Time Warner Cable or Charter Spectrum bought by AT&T? No it wasn’t, but I understand why some people are thinking that right now. It now turns out that both Charter Communications and AT&T have a history with Time Warner, but it’s complicated.

That said, there is a rumor now that AT&T’s arch rival Verizon is considering buying Charter Communications, the company behind Spectrum. Meanwhile, AT&T is trying to buy Time Warner. Time Warner differs from Time Warner Cable.

The two Time Warners

Time Warner is a huge media company. Time Warner owns HBO and CNN, among other things. They produce television and movies, and at one time they produced books and magazines and music and provided cable TV. Time Warner also infamously merged with AOL during the dot-com boom.

Over time, Time Warner spun off some of these assets. In 2009, Time Warner spun off Time Warner Cable into an separate company that retained the name, but the companies remained independent. AOL also went in 2009. Ironically, now Verizon owns AOL. Time Warner sold off or spun off the books, magazines, and music as well, in various deals between 2004 and 2014.

The existence of these two Time Warners is confusing. In May 2016, Charter Communications purchased Time Warner Cable, becoming the second largest cable operator in the United States. Charter brands its services with the Spectrum name.

In October 2016, Time Warner agreed to sell itself to AT&T. This deal is still pending.

Differing expansion strategies

Charter and AT&T are pursuing different avenues of expansion. Charter expanded horizontally by purchasing a larger rival. It has a neighbor in St. Louis named Express Scripts that built itself up the same way. AT&T tried that by buying T-Mobile, but failed. So instead, AT&T is expanding vertically, by purchasing a content producer. Comcast did the same thing by buying NBC/Universal.

In a way, the AT&T deal resembles AOL’s purchase of Time Warner, but I think there’s more synergy now. AOL didn’t offer any kind of television service. It was an Internet provider, and it wasn’t completely happy about providing Internet service. AT&T offers television along with Internet, landline and cell phone service.

Ironically, AT&T is sort of putting the old Time Warner empire back together. It’s just combining the media with a different infrastructure provider.

So no, AT&T isn’t getting into the cable business. AT&T will keep delivering television over satellite and fiber optics, and now it will own some of the content. Other TV providers will still have CNN and HBO. They’ll just pay AT&T now instead of Time Warner. This is similar to how other TV providers pay Comcast for NBC/Universal content.

Charter is phasing out the Time Warner Cable brand name in favor of the Spectrum brand.

Enter Verizon

So, why is Verizon interested in Charter? Charter is in markets Verizon’s TV and broadband offerings aren’t. Verizon may use Charter’s infrastructure to boost its 5G wireless. So a Verizon-Charter marriage would help Verizon compete with AT&T.

Why didn’t Verizon buy Time Warner Cable when it was for sale, instead of trying to buy the Charter behemoth now? I don’t know.

If you’re interested in the difference between AT&T’s and Charter’s offerings, I’ve used both. Here’s my experience with them.

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