The AT&T-Time Warner deal represents a marriage of Time Warner's limitless movie and television empire — including Harry Potter, Batman, Superman films and the next generation of superhero movies being developed by DC Comics — with AT&T's wireless network, which covers 315 million people.
"We've seen a complete change in what the definition of content is. We've seen a complete change in simple issues like how do we consume content? What is content? Is content social media? Is content entertainment? Is content in a 30-minute form, a 60-minute form? Is it binge watched? Is it watched as needed?" said Ovitz, who was once known as the most powerful man in Hollywood. "Everything's changed based on the mobile device."
While there's all these giant technology companies like Facebook and Amazon providing distribution and content, the media companies based in Los Angeles have been in the business of creating entertainment for so much longer, the former talent agent said.
"The other larger companies that are flush with cash need that content to put through their pipes, whatever those pipes might be," Ovitz said on Thursday.
— CNBC's Jeeyeon Park, Javier David, Patricia Martell and Bree Kelly contributed to this report.