The chief executives of Australia's biggest television broadcasters say the shockwaves from AT&T's blockbuster bid for Time Warner will reverberate in Australia as telecommunications companies up the ante in the battle for content.
In the wake of the US telco's $US85.4 billion ($112 billion) bid for Time Warner, which owns businesses such as HBO, TNT and Warner Bros, the chief executives of Seven West Media, Network Ten, Southern Cross Austereo and Prime Media said content is a vital part of the telco sector's future.
Content has become an increasingly important part of telco strategy over the last decade. In Australia, Optus, which is owned by Singtel, beat out Foxtel for rights to the English Premier League with an audacious bid of $189 million over three years, far outbidding Fox Sports and Qatar-owned beIN Sports.
Optus is looking to become a multimedia company and is looking at buying more rights, including a look at the A-League. The Singapore-owned telco also holds some digital Cricket Australia rights.
Telstra owns 50 per cent of Foxtel, sharing the other half with News Corporation, and holds digital rights to the National Rugby League, Australian Football League and netball.
Seven West Media chief executive Tim Worner told Fairfax Media that the AT&T deal will reverberate through the media and telco industry.
"It is another example, probably the biggest one yet, of telcos realising just how important content is to their customers. But, it is more than that. It is a content company making that content even more valuable by delivering it everywhere, by making it more available that ever before," he said.
"For us at Seven, this absolutely confirms our strategy, it vindicates the intense focus we have put on creating and therefore owning and controlling our own content."
Mr Worner said there is a strong chance there will be further tie-ups.
"We have seen telcos go after live sport and it stands to reason they should be after anything where the audience shows a high level of passion and commitment. When we set out to create shows we are striving for that high level every time."
The role of content for the likes of Telstra, Optus and Vodafone is only rising. The Australian Competition and Consumer Commission is undergoing an inquiry into whether or not to declare a whole domestic mobile roaming service, which if declared would allow telcos to use each other's networks for a fee.
If that were to happen, something that Telstra and Optus are against while Vodafone and TPG are in favour of, the era of the network being a point of differentiation would end and competition in new areas such as content would ramp up even further.
Prime Media chief executive Ian Audsley said in the telco industry's quest for top line growth, content acquisition is a sensible target.
"The future for telcos is content, so it makes absolute sense that they'd be looking to acquire creators of content."
Southern Cross chief executive Grant Blackley said the AT&T deal makes sense and will open new revenue streams for the telco.
"It's their future, they have wonderful content associations. Their distribution is second to none, in terms of their platforms, and they see this as another opportunity to grow revenues. Could it happen in Australia? Yes it could, but it will go through the checks and balances on the way through," Mr Blackley said.
"It's interesting that we can't merge or have a conversation with Fairfax, but Telstra could buy us tomorrow."
Creating good quality content and building an audience for it is not easy, so it stands to reason that telcos are looking at companies like Time Warner to fill that gap for them rather than try to do it themselves.
Ten chief executive Paul Anderson said getting access to the premium content is the difficult part.
"I think content is always going to be the point of differentiation and I think telcos clearly want premium video. Trying to curate it yourself, that's difficult and we all know, especially in this country, the best premium video content is on free-to-air networks," Mr Anderson said.
"I think that's always been the dilemma for telcos, and anyone else who is trying to curate video content outside of broadcasters, that trying to emulate what any broadcaster does is incredibly difficult and in most cases cost prohibitive to do it to the same level."
