If you’ve been paying attention to AT&T Inc. (NYSE:T) the past few years, you’ve noticed that T stock wasn’t content to just be a telecom company. What began with the acquisition of DIRECTV, which seemed like just a way to save T stock from becoming obsolete, may have been the first stage in building the company into a media empire.

With DIRECTV, AT&T joined with other telecoms in providing some form of cable/satellite TV distribution service. The goal initially seemed simple. It was just another way for T to bundle services together.

Telecom services alone are great for AT&T’s cash flow. At this point, the limited number of carriers plus the necessity of owning a cellular phone, guarantees revenue, if not growth for T stock.

The Other Elements of AT&T

The benefit of content distribution is that it is subscription-based. Again, because there are a limited number of distributors, subscription competition exists, but there is a floor to receive programming, and that means regular income and cash flow. It also means the opportunity to upsell packages like NFL Sunday Ticket, VOD and other programming.

Yes, there is some cord-cutting going on, but I think the threat to AT&T stock is overstated. While younger consumers may not spring for cable or satellite and be content to watch on their phones, a lot more consumers still prefer to watch content on televisions and increasingly bigger screens.

So, what was the next move for T? The stage had already been set way back in 2009 and 2013, when Comcast Corporation (NASDAQ:CMCSA) bought NBC-Universal. AT&T decided to go after Time Warner Inc (NYSE:TWX).

AT&T, already set with distribution for content, decided to follow its peer and buy up a massive content producer. The list of content producers owned by Time Warner includes: HBO, Cinemax, Turner Broadcasting, TBS, TNT, TCM, Turner Sports, Bleacher Report, NCAA.com, PGA.com, NBA.com, NBA League Pass, WNBA.COM, Universal Wrestling Corporation, TBS Animation, 10% of Hulu, CNN, Warner Brothers Studios, DC Comics, Warner Brothers Consumer Products, Warner Brother Digital Networks, Warners TV, Warners Home Entertainment and about 25 strategic investments.

TWX has consistently been the highest box-office grossing studio.  The reach of all its content is such that Americans of almost every demographic are touched. Some of these assets are insanely profitable, like HBO. Watching content can now occur at home via DIRECTV, or on your phone, if carried by AT&T. How about getting a price break on watching Time Warner content if you agree to switch your carrier to AT&T? You’ll get deals on everything if you bundle up everything. The potential for synergy is enormous.

The other thing that isn’t listed in the bucket of assets at Time Warner is intellectual property. Well, I mentioned DC Comics, but beyond that are tons of exploitable properties, including Harry Potter, Lego, and the run of theater shows that were pulled from WB films.

Bottom Line on T Stock

Essentially, T stock is trying to make itself indispensable. Everyone needs cell service. Everyone needs cable/satellite service. Everyone needs content. On a macro scale, this is why AT&T is going to remain a long-term investment with a fairly high degree of safety.

Now, I don’t see AT&T stock as much of a growth play. There’s not a lot here in terms of capital gains.

In fact, T stock has literally had only a 1% return over the past five years. However, it has paid dividends all that time — about $10 worth. So that’s a 26% pre-tax return, or about 5% annually. For income investors, that’s not bad.

I actually think you are better off trading T stock. It has been in a tight trading range for many years. On a $40 stock, you’ll earn more with some deft swing trades, and you may even be in AT&T stock at a time when it goes ex-dividend.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 22 years’ experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.