AT&T and Verizon conflated controlling distribution with controlling demand and hence wasted billions by buying media businesses like Time Warner and Yahoo
Manage your Stratechery subscription. — Felix Salmon asked a question on Twitter: — While Salmon's question was driven …
Context & Ripple Effects
This verdict closes a five-year arc. AT&T's 2016 case for buying Time Warner rested on packaging content with data connections while DirecTV shrank and Verizon, Facebook, and Google circled; Verizon ran the same play from the other side, completing its Yahoo purchase as part of a push to build a media business at Netflix scale.
Stratechery's diagnosis is that both carriers mistook owning the pipe for owning what customers actually choose — a conflation critics flagged even at approval time, when the government was faulted for making a weak case against letting the merger through. With WarnerMedia still struggling to integrate Time Warner's three silos years later, the argument now has a scoreboard.
First-order effects
- AT&T faces renewed scrutiny of whether WarnerMedia can reach the 70M-subscriber streaming target its CEO set, given the unresolved task of fusing Time Warner's three silos into one service.
Second-order effects
- Verizon's completed Yahoo acquisition, bought precisely to challenge new media giants, now carries the same structural question: neither carrier gained leverage over where viewers actually spend attention, so the billions bought no demand-side power against Netflix, Facebook, or Google.
Third-order effects
- If the pattern holds, the industry reverts to the separation the merger approval blurred — pipes competing on connectivity, studios and streamers competing on demand — with future carrier-media combinations judged less on antitrust filings than on whether the buyer controls the customer relationship.
The trend: Carrier-media vertical integration is being repriced as a category error, pushing telecom giants back toward pure connectivity while demand-side platforms retain the customer relationship.