AT&T's Time Warner Purchase Brings a Fortune in IP

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By Anandashankar Mazumdar

Oct. 24 — AT&T Inc.'s $85.4 billion purchase of Time Warner Inc. would bring it a wealth of intellectual property assets, including such highly valuable film and television properties as Batman, Superman, Harry Potter and the Lord of the Rings, plus the TV library of HBO — a leading network of TV’s second “golden age.”

Along with rights in works protected by copyright law, AT&T would acquire some of the most prominent brands and trademarks in the entertainment field, including ones directly associated with content— like Batman—and others associated with distribution services—like HBO.

The purchase, which is pending approval by federal regulators and which AT&T has targeted for closure by the end of 2017, also represents another step in the consolidation of program content and delivery that began in 2009 when Comcast Corp. acquired NBC Universal and its TV, film and music library from General Electric Co. If the deal goes through, AT&T, which acquired the DirecTV satellite programming service just over a year ago, will own its own content library.

And, like Comcast, AT&T would have to reconcile its conflicting interests as an owner of content and a service provider whose users might infringe the copyright interests in such content.

“If this goes through, it's going to become a gorilla on the same footing with Comcast,” Dyan Finguerra-DuCharme, an intellectual property lawyer with Pryor Cashman LLP, New York, said.

Time Warner owns some of the most popular film and television content from the last few decades, including the Harry Potter series, the Lord of the Rings series, the DC Comics superheroes and all the HBO programming, including “Game of Thrones,” “Veep,” “Silicon Valley,” “The Sopranos” and “The Wire.” Its film library includes classic Oscar winners, such as “Casablanca” and “Gone With the Wind,” and contemporary ones, including “Argo” and “The Departed.”

Ironically, the acquisition was proposed just a few years after Time Warner spun off its own cable and broadband network, Time Warner Cable, which was purchased by Charter Communications in 2015.

Vast Film, Television Library

AT&T would also becomes co-owner, with CBS Inc., of the CW TV network, and of the Hulu streaming service with rivals Comcast, 21st Century Fox, and the Walt Disney Co.

According to SEC filings, Time Warner's film library and brands are worth $4.1 billion. That puts it in the ballpark with Disney ($7 billion) and Fox ($6.8 billion).

In 2015, Forbes ranked Time Warner the fourth largest media company, after Comcast, Disney and Fox, and ahead of CBS and Viacom.

For AT&T, the acquisition “just goes really hand-in-hand with what their capabilities really are,” Finguerra-DuCharme said.

Peter J. Toren, an IP lawyer with Weisbrod Matteis & Copley PLLC, Washington, said that other network and hardware companies like Apple Inc., Google Inc., and Verizon Inc. must be scrutinizing the remaining big media companies to see if they, too, could take advantage of such synergies.

“Netflix is ripe for takeover,” Toren said, noting the streaming company's high revenues and low profits. “Apple would probably love to acquire Netflix.”

Sony is already trying to become a service provider through its Sony Playstation, Toren pointed out, although that device still needs to use a different company's internet service.

AT&T Inherits Time Warner's Copyright Litigation

Along with the vast library of filmed content, AT&T will also get Time Warner's litigation docket, 45 percent of which is copyright infringement litigation, according to data from Bloomberg Law Litigation Analytics.

So, like Comcast, AT&T would become a copyright owner—with an interest in preventing unauthorized use of its content—and not just a network owner facing accusations of letting users infringe copyrights.

Of course, Time Warner, like all media companies, is routinely on either end of copyright infringement litigation. In pressing infringement claims, it has frequently joined with media rivals, such as in the case of LegendSky Tech Co., which sells a device that bypasses anti-copying technology on Blu-ray discs (21 PTD, 2/2/16).

By contrast, in defending against infringement claims, it is frequently fighting smaller parties, such as the former arms dealer who sued Warner Bros. in April, alleging that the film "War Dogs" infringed his screenplay based on his own experiences dealing weapons in Afghanistan. Incarcerated Entertainment, LLC v. Warner Bros. Enterntainment, Inc., M.D. Fla. No. 16-01302 , complaint filed, 4/28/2016 .

Time Warner and other large content owners have also been among the chief critics of Google, whose YouTube user-generated video service often hosts unauthorized content.

According to data from Bloomberg Law, in the last five years, Time Warner and its Warner Bros. subsidiaries have been involved in 175 copyright cases in federal district court. In 141 of those cases, Warner was a plaintiff.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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