Even as US telecoms giant and the third largest cable provider AT&T announced jointly with Time Warner it would acquire the latter in an 85.4 billion dollar deal, US lawmakers and both presidential candidates have raised concerns about the deal. A Senate subcommittee that is a watchdog on competition will conduct a hearing in November.
Republican senator Mike Lee, who chairs the antitrust subcommittee, was reported as saying the deal would “potentially raise significant antitrust issues, which the subcommittee would carefully examine”.
Democratic presidential candidate Hillary Clinton’s spokesman was quoted as saying there were “a number of questions and concerns” about the deal that regulators needed to scrutinise, but added “there’s still a lot of information that needs to come out before any conclusions should be reached”.
Donald Trump, however, was not sitting on the fence. He said he would block the deal if he wins because he believed it was “too much concentration of power in the hands of too few”.
What are the concerns?
The merger will connect, directly — and, concerns are, preferentially — AT&T’s 130 million mobile phone customers along with 25 million pay-TV subscribers, with content from Warner Brothers film studios and TV channels CNN, Cartoon Network and HBO.
The main competition concerns centre around the likelihood of higher prices but less choice for consumers. Regulators are concerned that for the consumer, this deal would most likely adversely impact price, choice and advertising. Concerns are that AT&T might offer consumers preferential access to the Time Warner shows including those on HBO and CNN plus the big ticket NFL games, without that streaming eating into their data plans.
Customers with other telecos would be faced with the possible spectre of having to shell out higher charges, or forego the content or even be forced to switch to AT&T.
With increasing numbers of millennials and younger audiences increasingly severing ties with fixed or traditional television and moving to watching their favourite content on mobile, competition concerns are that AT&T will use the massive Time Warner content magnet to attract viewers by offering lower streaming costs as ‘sweetners’ to access its formidable library. Remember it includes tentpoles like Game of Thrones, all the NFL football on TNT, CNN news network content, Harry Potter movies, and much morefrom Time Warner brands like the Warner Brothers film studios, HBO, Cartoon Network, CNN, TBS, and TNT.
However, AT&T CEO Randall Stephenson believes the deal will receive regulator approval. He was reported as saying, “”no competitive harm … is being rendered by putting these two companies together, so any concerns by the regulators, we believe, will be adequately addressed by conditions.”
After the Antitrust Subcommittee hears the concerns, it will be up to the US Justice Department, which can block or put conditions on the deal going through or straight away approve it. That last possibility seems highly unlikely. Purely because of the enormous power and advantage that the acquisition will give AT&T, which owns both, cable and broadband platforms, but never owned the content.
If the deal goes through, AT&T will acquire, in one fell swoop, literally, some of the biggest and best content, and virtually overnight, be poised to possibly dictate its own terms across the three platforms of price, choice and advertising. That, already alarmed competitors like Comcast and Verizon wouldn’t like. No wonder, the BBC’s Joe Lynam has opined the deal “might not go through at all”.
Consolidation, the order of the day
With the mobile pipeline growing like Jack’s beanstalk virtually overnight, the content giants need to get on to the biggest OTT platforms to distribute their offerings. That, say media analysts, is one of the main reasons Disney is said to be serious about buying Netflix, with bigger fish like search and mobile giants Google and Apple respectively eyeing Disney it self. The fish seem to have identified their targets and are lined up in size sequence. This really is the day and age of consolidation in the media industry.
Author: Pavan R Chawla
A mediaholic who mainlines on content, communication, business consultation and strategy, Pavan has been an editor of newspaper and trade (Media, Marketing & Advertising) publications. He is into percussion, remixing of music, watching movies and television, writing, reading and design.