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Turner and Hulu on AT&T/TW Merger: 'This Can't Close Fast Enough'
While the Time Warner-AT&T merger would great a behemoth entertainment company, Turner's CEO says it's needed to compete.

When John Martin, chairman and CEO of Turner, and Randy Freer, CEO of Hulu, met on stage during their CES 2018 keynote conversation, the agenda was merger talk first, then media. Turner is a division of Time Warner, while Time Warner owns 10 percent of Hulu. AT&T announced a plan to purchase Time  Warner in October 2016, but a November 2017 suit by the Justice Department threatens to block it, throwing an unexpected wrench into the plans.

"Our view would be this can't close fast enough," Martin said. From his perspective, the merger will further his company's strategy and he's excited about moving on with AT&T. While respectful of the process, he noted that no vertical merger that looks like this one has been blocked in all U.S. history. That happening would be a precedent he doesn't expect. "Personally, I was disappointed," he said of the president's comments that the merger is "not for the good of the country," but he remains hopeful. His goal in these uncertain times is to keep uncertainty from negatively effecting his company's growth.

"Where there's uncertainty a lot of bad things can fill that void," Martin said. He wants his employees focused on strategy, not tweets.

At Hulu, Freer was also doing his best, he said, to filter out the noise. His company announced Tuesday it now has 17 million subscriptions, and he's focused on growing that number and bringing value to subscribers. "We just have to keep doing what we do," he said. As the regulatory process plays out, he'll find out more how the companies want to proceed. "We have a huge head start," he said, noting that his job is to take advantage of that head start and not get caught up in noise surrounding the merger.

While Turner represents the old guard of cable and Hulu represents the new guard of OTT, both face competition from the even newer guard of tech giants such as Facebook and Apple spending big on original programming. What the regulators don't understand, Martin noted, is that Turner and the other Time-Warner properties are trying to survive in the land of giants. Netflix will spend $8 billion on original content this year and Apple will spend $1 billion. His company needs scale and expertise. He sees cable and tech in a race to the middle, with cable learning to distribute and monetize content online, and tech learning to create consistent hit programs.

Hulu is excited to compete with these new players, Freer said, adding that he thinks there's too much talk about big budgets. His goal is delighting consumers with choice and the ability to control the experience. In competing against Apple, Google, and Facebook, he thinks his company can create a unique experience and win.

Looking ahead to the coming years, Martin likes the odds. If companies are well-branded, willing to be nimble, and willing to launch new products, there's a bright future. "I'm incredibly optimistic," he said. "There's more video consumption today than ever before."

John Martin and Randy Freer

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