The Trentonian (Trenton, NJ)

AT&T-Time Warner deal may not do consumers much good

- By Tali Arbel

NEW YORK >> AT&T and Time Warner are playing up how their $85.4 billion merger will lead to innovative new experience­s for customers. But analysts, public-interest groups and some politician­s are far from convinced.

Republican presidenti­al candidate Donald Trump said it should be killed. Tim Kaine, the Democratic vice presidenti­al nominee, said less concentrat­ion in media “is generally helpful.” And the Republican chairman and Democratic ranking member of the Senate’s antitrust subcommitt­ee said that the deal would “potentiall­y raise significan­t antitrust issues.”

The potential harm to consumers from this deal could be subtle — far more so than if AT&T were simply acquiring a direct competitor like a big wireless or home broadband company. Time Warner makes TV shows and movies; AT&T gets that video to customers’ computers, phones and TVs. But the concern is that anything AT&T might do to make its broadband service stand out by tying it to Time Warner’s programs and films could hurt consumers overall.

WALLING OFF TIME WARNER

The company certainly wants to do that. “With great content we believe you can build a truly differenti­ated service,” said AT&T CEO Randall Stephenson. “In particular, mobile.”

Here’s how that would work. Because of Time Warner’s worldfamou­s shows and movies — “Game of Thrones,” the “Harry Potter” films, profession­al basketball — and AT&T’s ability to gather informatio­n about its tens of millions of customers, AT&T thinks it could do a better job tailoring ads and video to user preference­s. It could then create more attractive subscripti­on packages suited for phones, where people are increasing­ly watching video.

But many consumers already consider ads that know everything about them creepy or invasive, and digital-rights groups complain that any preferenti­al deal AT&T could offer with, say, HBO would hurt competitio­n.

Say AT&T reserved HBO for its customers only. That would cut HBO’s reach and hurt its value.

“This creates massive strategic tensions that are almost impossible to resolve,” wrote Jackdaw Research’s Jan Dawson in a note. AT&T can either disadvanta­ge Time Warner by restrictin­g who can watch its stuff or limit benefits for its own customers so much that they barely rate attention, he suggested.

FREE DATA FOR TIME WARNER

There’s another way AT&T could favor its own media offerings. The company currently lets many of its wireless customers stream from the DirecTV app on their phones without counting it against their data caps, a practice known as “zero rating.” AT&T has suggested it may also zerorate its upcoming live-streaming DirecTV Now service, which doesn’t require customers to install a dish on their homes.

If AT&T did that with, say, HBO shows and TNT’s basketball games, it could upset other video providers, who could reasonably worry that customers might shun their streaming services to avoid exceeding their monthly data limit and possibly suffering slower data speeds as a result.

The companies also say that relying more on targeted ads could help lower the cost of making appealing shows and films. Even if that’s the case, the savings might not get passed on to consumers.

Rich Greenfield, a BTIG analyst, noted there’s no evidence that Comcast’s 2011 acquisitio­n of NBC led to lower prices. In fact, prices have been increasing broadly, although Greenfield said there’s no way to know whether the deal contribute­d to that trend.

 ?? STEVEN SENNE — THE ASSOCIATED PRESS FILE ?? This file photo shows an AT&T logo on a store in Dedham, Mass. On Saturday several reports citing unnamed sources said the giant phone company is in advanced talks to buy Time Warner, owner of the Warner Bros. movie studio as well as HBO and CNN. AT&T...
STEVEN SENNE — THE ASSOCIATED PRESS FILE This file photo shows an AT&T logo on a store in Dedham, Mass. On Saturday several reports citing unnamed sources said the giant phone company is in advanced talks to buy Time Warner, owner of the Warner Bros. movie studio as well as HBO and CNN. AT&T...

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