AT&T, Time Warner CEOs plug merger on Hill
Lawmakers skeptical of plan to disrupt pay-TV, increase competition
AT&T CEO Randall Stephenson and his Time Warner counterpart Jeffrey Bewkes did their best to convince a Senate subcommittee their proposed $85.4 billion merger will ultimately be good for consumers. It wasn’t an easy sell. “I want to be clear ... should this deal be approved, nothing is preventing a combined AT&TTime-Warner from going to any of its competitors in the pay-TV market and charging double for access to Game of Thrones, Veep, etc.,” said Sen. Al Franken, D-Minn.
Sen. Richard Blumenthal, DConn., was equally skeptical: “I have very serious concerns about this transaction.”
Since it was announced in late October, Democratic and Republican lawmakers and consumer rights groups have worried the megamerger will restrict consumer choice. In his campaign for the White House, Donald Trump said the deal would concentrate too much power in the hands of too few.
Size is an issue. AT&T is the nation’s second-largest wireless carrier and a major player in the pay-TV space as the owner of DirecTV. Time Warner has HBO, Warner Bros. and CNN among the assets in its entertainment and media portfolio. A potential concern is AT&T might give preferential treatment to its own content, either by withholding access or raising the costs of such programming to rivals.
The two executives’ message was simple — that the tie-up between major content distributor and content producer will be a boon for consumers — and they had heavyweight backing from Mark Cuban, billionaire owner of the NBA’s Dallas Mavericks.
During his remarks to the panel, Stephenson insisted the deal will not eliminate any competitors from any market and in fact would increase the competition with cable companies. “What this merger is not about is consolidation either in media or telecom,” he said. “Our intent is to disrupt the existing pay-TV model. We want to get the most content to the most people at the lowest cost. And we want consumers to pay for their content once and then watch it anywhere at any time. Every episode, every season on whatever device they choose.”
Sen. Chuck Grassley, R-Iowa, ticked off pluses and minuses of the deal, saying “we want to ensure the proposed merger doesn’t allow an unfair advantage over competitors.” But he also pointed out any decision shouldn’t “stifle innovation or deter emergence of cutting edge technologies consumers demand.”
This concept — that the combined behemoth would result in better, cheaper, more usable products, or what Bewkes has termed a “revolution in the TV world” — was echoed by Cuban.
“We need more companies with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook,” Cuban said. As separate companies, neither AT&T or Time Warner are in a dominant position, he added.
But in speaking out against the deal, Gene Kimmelman, CEO of Public Knowledge, said, “It is the diversity of programming owned by different people over different platforms that fuels our democracy. “No one has said it better than the president-elect. It is in that environment we urge you look at this carefully and enforcers not to take risk with a transaction that could be harmful to that Democratic process and consumer’s pocketbooks.”
Senators can influence the debate, but it is the Justice Department in a Trump administration that will take the lead on the deal, though the Federal Communications Commission may weigh in.