AT&T's Big Play for Your Eyeballs

The media giant's grand plan to remake the media world reveals some disturbing features of the capitalist landscape.

AT&T, led by CEO Randall Stephenson, is making some very risky moves to try to remain relevant in a rapidly changing corporate world. Forbes has a great piece on Stephenson's strategy to remake the company:

AT&T Has Become a New Kind of Media Giant

Geoff Colvin explains the audacity of the plan:

Stephenson’s strategy is breathtaking in scale and scope, the largest transformation underway at any company in the Fortune 500. AT&T’s main traditional competitor, Verizon, has chosen an entirely different path, and Stephenson’s new rivals are in markedly different businesses. Back when AT&T was Ma Bell, after all, it was proudly staid, reliable, and boring. Stephenson marvels, “I spend as much time thinking about Amazon and Netflix as I do thinking about Verizon and Comcast now.”

Stephenson also must think about the phone business, though, because it remains his biggest business by far—and it’s not growing, putting AT&T’s stock price and its financial future under pressure. That explains the company’s buying spree—and its massive debt load. Buying DirecTV in 2015 for $67 billion and Time Warner in 2018 for $104 billion has made AT&T the most heavily indebted nonfinancial company in America. Including lease obligations, which the accountants say must now be counted as debt, the company owes over $200 billion. That’s about the size of the external debt of ­Taiwan. Such massive debt merely matches Stephenson’s audacity. “AT&T’s ambition in acquiring Time Warner goes far beyond transforming a storied American company,” says Craig Moffett, a longtime telecom analyst and an AT&T critic. “Its goal is nothing less than a complete reinvention of the media ecosystem.”

This sounds a lot like the disastrous AOL / Time Warner merger from the year 2000, not least because of the dependence of the strategy on supposed 'synergies' that will make the combined businesses more profitable. The larger contours of these deals - the sheer size, the relative market positioning of the companies, the fear of being left out - sound remarkably similar as well.

If AT&T's strategy is successful, Stephenson will be hailed as a visionary. But I'm not buying it - this has all the hallmarks of becoming the victim of your own propaganda. 'Reinvention of the media ecosystem' is one way to think of it - 'taking on an enormous amount of risk and debt to try to keep up with companies that have proved more adept at navigating the current business environment' is another.

Stephenson's strategy raises a lot of red flags, but perhaps the most disturbing is his reliance on an all-too-familiar form of magical thinking related to technology. The Forbes piece, in discussing the riskiness of AT&T's play to compete in the content marketplace, quotes Warren Buffet:

Even Warren Buffett quails at the prospect of competing in such a powerful field of rivals. “Everybody has just got two eyeballs, and they’ve got x hours of discretionary time … maybe four or five hours a day,” he said recently at a charity event, speaking generally about the entertainment industry. “You’ve got some very, very, very big players that are going to fight over those eyeballs. The eyeballs aren’t going to double. You have very smart people with lots of resources trying to figure out how to grab another half-hour of your time.” His assessment: “I would not want to play in that game myself. That’s too tough for me.”

But Stephenson has a glib response to this well-formed concern about competing in an already crowded market for customers' attention and time:

Any business that Buffett wants to avoid sounds unpromising, but Stephenson rejects the legendary investor’s premise. Acknowledging that “there are only 16 waking hours in the day,” he says, “Well, we haven’t filled up the 16 hours yet.” He nods toward his office window over Commerce Street with its busy traffic, which he says will ease when 5G networks enable autonomous cars. “When you have the lion’s share 'of those cars autonomous, for the average person that’s another two hours of availability of screen time, consuming video.”

Reading this just made me put my head in my hands. I'm not even sure where to start with my criticism of this explanation and the way of thinking that it evidences. There are a number of assumptions being strung together here in a very fragile chain of logic - not least that technology will almost magically solve a long-standing problem (are you really going to bet the farm that autonomous cars will free up, on average, two hours of people's time every day? That seems wildly unrealistic) and that AT&T will be able to claim most or all of that time for its content.

Notice that nowhere is there any mention of whether people need, or even want, two more hours of video content in their 24-hour day. If, as a society, we valued human needs like time to exercise creativity or to spend with friends and loved ones, the prospect that some widespread change would free up two more hours of time in the average person's day would be a goal in and of itself, not something to be monetized by immediately filling that time with something else. Corporate America is determined, whether you like it or not, to fill the vacuum of customer attention, to get you to watch more video so they can sell more ads. Whether people want that is irrelevant. Companies will find a way to get you to consume more - our system of enterprise has become very adept at creating demand.

And AT&T isn't content with existing ad technology - it wants to make ads even more targeted, to leverage even more personal data. The Verge describes this plan to collect even more data, and make ads even more invasive:

The future of AT&T is an ad-tracking nightmare hellworld

At a time when the public is becoming more aware of data privacy issues, and in fact expressing more concern about data privacy than other issues like healthcare and even job creation, AT&T is doubling down, making its business strategy heavily dependent on even more rampant exploitation of customer data. Of course, AT&T is not uniquely guilty of this behavior - the data revolution represents a new phase in system-wide threats to privacy and autonomy. But its corporate strategy offers a window into the twisted thinking and complete disregard for real human concerns that defines our form of capitalism.


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