AT&T’s CEO Randall Stephenson and Time Warner’s CEO Jeffrey Bewkes spoke with senators about their proposed $85.4 billion merger. AT&T distributes content across the web as one of the country’s largest mobile and home internet providers. Buying Time Warner would allow them control over a large amount of content and, by almost any estimation, would give them a serious monopolistic advantage over other TV providers.
Senators and witnesses at the hearing said AT&T and Time Warner combined might restrict valuable programming such as HBO to AT&T’s TV services or charge rival TV providers a higher price to carry it. They also discussed AT&T’s zero-rating, which exempts the company’s own video content from mobile data caps while requiring online video providers to pay for the same data cap exemptions.
Don’t sweat it, says Randall Stephenson. You see, the competitive landscape means that AT&T would be doing itself a disservice if it held back cable content by using it as a bargaining chip against others. Also, it’s hard to get the right “talent” if you don’t offer up wide distribution because it’s not money and work talent wants its “distribution.” You know, like how one of the channels they are buying, HBO, created all of its revenues by being exactly not that.
Sen. Al Franken (D-Minn.) disputed AT&T and Time Warner’s argument that it wouldn’t be able to attract programming talent if it limited distribution. HBO attracted the talent necessary to put on shows like The Sopranos even though the channel was “exclusive” to those cable customers who were willing to pay extra, he said.
Just as The Sopranos pushed customers to subscribe to HBO, exclusive access to Time Warner programming could push customers to DirecTV’s satellite and online services or HBO’s standalone streaming service, Franken argued.
When Time Warner’s Jeffrey Bewkes spoke with the New York Times a couple of months ago, he had this to say:
Jeffrey L. Bewkes, the Time Warner chief executive, dismissed those fears when we spoke Friday, saying that they don’t jibe with the company’s business imperatives: to offer the most channels for the best price, and to have its own channels as widely distributed as possible.
“It would be like selling toothpaste and not putting it in Duane Reade,” he said, referring to the ubiquitous New York City drugstore chain. “It doesn’t make any sense.”
As Sen. Al Franken explained, that analogy makes no sense as we are talking about people on Comcast not being allowed to see Game of Thrones, or having to pay a premium to see Game of Thrones. Trump said during the campaign that he would deny a Time Warner/AT&T merger outright. Of course, Donald Trump is a liar and if either company tells him he can have his own television tower after his tenure as corrupter in chief, I’m sure the tiny-handed president will change his mind.
The senators can influence the debate, but it is the Justice Dept. in a new Trump administration that will take the lead on the deal, though the Federal Communications Commission may also weigh in. AT&T has expressed optimism that regulators would ultimately decide in its favor.
How Donald Trump as president might view big time mergers remains to be seen. The President-elect met with Softbank CEO Masayoshi Son on Tuesday, possibly raising the possiblity that the thwarted merger talks between T-Mobile, and Softbank-owned Sprint might be revived.
2016 may have been a rough year but 2017 is going to continue to be bumpy.