This post has been updated to reflect news of the deal's approval by a federal judge.
Now that a federal judge has blessed AT&T's $85 billion merger with Time Warner — handing a major defeat to the Justice Department — the path is clear for the two companies to close their landmark deal by June 20. But what will this mean for TV viewers? What new capabilities will AT&T have that it didn't have before?
Here's a teaser of what's likely to come, according to AT&T executives' own testimony during the case.
New streaming video apps
When AT&T chief executive Randall Stephenson testified in court in April, he wasted little time before teasing a new, online streaming app that's expected to roll out in the coming weeks.
The service, known as WatchTV, will cost $15 per month and provide a slew of cable programming that specifically excludes sports content. The idea is that because sports programming is expensive, getting rid of sports from this “skinny bundle” could appeal to cost-conscious viewers who don't care much about sports. In this way, you can think of WatchTV as a cheaper sibling to AT&T's other streaming app, DirecTV Now. Stephenson added that the product will be free for AT&T wireless subscribers who have an unlimited data plan.
This product will roll out after the Time Warner merger closes, AT&T has said. Meanwhile, the company has teased a "premium" streaming video product priced at $80 to $90 a month. The higher-tier service will be virtually identical to DirecTV's existing satellite service, but delivered over the Internet. It is likely to be a key product offering from the combined company, as Stephenson testified that he is trying to shift directions at AT&T at a time of rapid change in the television industry.
New video formats
John Stankey — the AT&T executive who plans to run Time Warner after the merger — told the court that one new product he imagines could be 15-minute news roundups from CNN, formatted specially for mobile devices, that are “geotargeted to you.”
What you see in the roundups may change depending on your location, perhaps highlighting locally relevant news that keeps viewers deeply engaged. The more of these videos you watch, the more you drive data usage on AT&T's wireless network — meaning more profits for AT&T. To do the geotargeting, AT&T would likely use location data supplied by your smartphone.
The collection and use of geographic data is just the tip of the iceberg. AT&T plans to dramatically expand its use of customer and viewer information to supercharge its business.
"We have really great customer insight on what kind of shows, media, content they’re viewing, where they are, all kinds of information on the consumer," said Stephenson at an industry conference last month. But so far, he said, those insights have been limited to a "small scale."
As it pipes Time Warner's content over its wireless and home broadband connections, AT&T will get a much broader perspective on what consumers like to watch, on which platforms, in which locations and so on. This could turn AT&T into a data-gathering behemoth resembling Google, Netflix or Facebook.
All that data collection will allow AT&T to sell highly targeted advertising, just as Google does. These targeted ads are way more profitable than non-targeted TV ads, Stephenson has said, bringing in anywhere from three to five times more money.
Whether you're at home or out and about, this could mean that two people watching the same sportscast could end up watching very different ads. For example, Stankey said, a beer-lover might see a beer commercial, while a soft-drink fan would see an ad for soda.
“The market we're competing in is the market for the consumer's time and attention,” Stankey said in court testimony.
More 4K video everywhere
4K video, or ultra high definition, is regarded as the next step up from high definition video. Compared with video that's rendered in, say, 720p or 1080p, you get a sharper image. The catch is that it requires TV screens and monitors that can support that resolution. And until more consumers adopt those newer screens, there's not much of a market for 4K content.
That's the chicken-and-egg dilemma that has bedeviled 4K so far. But Stankey said the merger could lead to faster rollout of 4K. That's because, once AT&T controls Time Warner, it can control how TV content is produced or shot, Stankey said. You can imagine all the sports games aired on TBS or TNT being shot in 4K, for example.
Why would AT&T make that decision, and couldn't someone else just as easily make that call? Well, recall that AT&T is motivated to increase usage of its network. 4K streaming takes much more data than regular HD (which takes much more data again than standard definition video), so getting more people to stream 4K video would lead to more data usage and more network revenue.
Time Warner merchandise in AT&T stores
After the merger, AT&T will want to use every opportunity to promote its new media business. And since AT&T owns more than 2,000 retail stores, the company thinks it can use that physical presence to entice people to buy movie tickets, merchandise or other Time Warner-connected stuff, Stankey said.
Walk into an AT&T store, and you might see posters for the next Batman film or the HBO show “Westworld.” Or maybe your child will see toys and other merchandise linked to the Lego movies. If because of that you end up buying a movie ticket, subscribing to HBO or getting the toy for your child, that's extra money in AT&T's pocket.