Guest Editorials: 2 views on AT&T’s Time Warner deal.
In the latest blockbuster media merger, AT&T announced over the weekend that it will pay $85.4 billion to buy Time Warner (the media company that owns Warner Bros. Studios, CNN and HBO, not the cable company recently purchased by Charter Communications). The deal doesn’t pose the kind of clear threat to consumers that’s seen when a company seeks to buy a direct competitor, as AT&T attempt to purchase T-Mobile. Instead , e combination of a major content distributor with a major content creator presents more of a mixed bag of potential benefits and drawbacks, neither of which regulators should ignore . ...
The former Ma Bell’s move is a delayed response to Comcast’s 2010 purchase of NBC Universal, which put one of the country’s biggest film and TV studios in the hands of its largest cable TV operator. One crucial difference is that AT&T, the second-largest pay-TV operator (mainly through the satellite-TV service it purchased in 2014, DirecTV), also operates the country’s secondmost-popular mobile phone network . ...
As with any merger between programmers and distributors, the pro-competitive incentives for the combined company could be offset by the anti-competitive ones. For example, Time Warner needs a large audience for its content, but AT&T would also be tempted to withhold some of that content from Verizon, DISH Network and other competitors to make its own services more attractive.
It’s a good thing, then, that the Federal Communications Commission has already adopted net neutrality rules that would bar AT&T from favoring its own content over any other provider’s online. The commission is also poised to adopt rules that would end cable and satellite TV operators’ effective monopoly over the set-top boxes customers use to receive their programming, which should help independent and online-only content providers compete against the CNNs of the world.
But regulators shouldn’t assume that those safeguards would be enough. Before they approve AT&T’s me-too purchase of Time Warner, regulators should take pains to ensure that the merger makes it easier, not harder, for content providers to build audiences online and on the air. This is a new golden age of video programming, with a proliferation of diverse voices and high-quality content from a growing number of sources. Regulators should be careful not to let ever-bigger media conglomerates bring that to an end.
From Chicago Tribune editors
To get a sense of why AT&T wants to buy Time Warner for $85 billion (and why the deal makes sense), consider how your screen-watching habits have changed over the past decade: You’ve progressed from staring at the television to consuming all kinds of media wherever you go.
Lots of people still watch cable TV, but there’s something quaintly 20th century about the experience of sitting on the couch in front of a 40-inch set. There are so many other ways to consume information and entertainment today . ...
This is all part of the tech convergence that’s breaking down barriers between TV, the internet and mobile phones, providing so many more choices for consumers . ...
Mega-mergers of this sort typically undergo government scrutiny to make sure they don’t violate antitrust regulations intended to protect consumers . ...
AT&T’s deal for Time Warner, rumored last week and announced over the weekend, isn’t an attempt to squeeze out competitors and dominate pricing because these two companies are not in the same industry: One operates a telecommunications pipeline and the other fills pipelines with content. The closest precedent for this transaction was Comcast’s 2011 purchase of NBCUniversal . ...
We won’t handicap the success of AT&T’s deal for Time Warner, but analysts don’t think it will be last of its type. Apple was said to be interested in Time Warner. There are other permutations no one yet can anticipate because technology is changing so rapidly, blurring all lines.
That’s reason enough to anticipate the AT&T deal, not dread it: Trends in the digital world are moving in the direction of giving more options to consumers, not fewer. Good.