On Possible AT&T-Time Warner Media Behemoth, 'Regulators Must Say No'

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On Possible AT&T-Time Warner Media Behemoth, 'Regulators Must Say No'

Consumers will see increased prices and fewer choices, analysts say

"Allowing a communications behemoth like AT&T to swallow the Time Warner media empire should be unthinkable," said former FCC Commissioner and Common Cause special adviser Michael Copps. (Photo: Mike Mozart/flickr/cc)

AT&T Inc.'s bid to buy Time Warner Inc. for $85.4 billion continues to garner criticism from lawmakers and watchdog groups alike who say the behemoth-joining deal poses significant risks to consumers and sets the stage for further entrenching media consolidation.

Politico reports Monday that the deal "could face major political obstacles in merger-wary Washington," and "will land in the lap of the next Congress and a new White House, both of which might be itching to take a bite out of a rapidly changing—and consolidating—telecom industry."

USA Today similarly reports that it "is likely to face some of the toughest regulatory scrutiny in recent U.S. history of mergers and acquisitions," while CNBC says the deal "is expected to face a tough road with regulators, with the rise of populist fervor on the campaign trail and in Washington."

The Wall Street Journal quotes analyst Craig Moffett of MoffettNathanson, a research firm that specializes in telecommunications, as saying, "The deal faces a steep uphill climb in Washington, and it obviously isn't helped by the fact that both the Republicans and the Democrats have now come out against it.”

AT&T may be able to avoid scrutiny from the Federal Communications Commission (FCC), Ars Technica writes, though it "will be analyzed by the Department of Justice."

Despite the expected uphill battle, AT&T chief executive Randall Stephenson expressed confidence that regulators will approve the deal—which he characterized as "vertical integration."

The deal means, the Washington Post explains Monday, 

that for millions of Americans, AT&T will control both the pipes of distribution and much of the shows, movies and other content that travels through the pipes. It's hard to overstate the significance of this move, both in terms of scale and in terms of the ripple effects this will have on Hollywood, the cable industry, the cellular industry and the broadband industry.

In other words, AT&T may be about to own a huge trove of some of the most recognizable names in media. This is a big moment, because anytime you watch anything owned by Time Warner, that'll be money in AT&T's pocket. It'll put AT&T in direct competition with companies such as Netflix and Amazon, giving it a big incentive to use its content and distribution platform as leverage against them. And it could spur a frenzy of other acquisitions, driving even more consolidation in the industry.

Time Warner's chairman and CEO Jeff Bewkes acknowledged as much, saying Saturday night, "You're going to see all kinds of distributors following," adding, "And you're going to see a kind of revolution in the TV world."

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That should give consumers cause for worry, according to advocacy groups like Common Cause. "Further entrenching monopoly harms innovation and drives up prices for consumers," said former FCC Commissioner and Common Cause special adviser Michael Copps.

"When merger authorities get the call from AT&T asking for approval of its proposed Time Warner acquisition, they should slam down the phone in disgust."
—Robert Weissman, Public Citizen
"Allowing a communications behemoth like AT&T to swallow the Time Warner media empire should be unthinkable," Copps said, adding, "The answer is clear: regulators must say no."

Ehoing Copps' concern regarding prices, Free Press policy director Matt Wood said, "Big mergers like this inevitably mean higher prices for real people, to pay down the money borrowed to finance these deals and their golden parachutes. The deals are driven by Wall Street's insatiable desire for short-term growth at any cost. And just as AT&T's recent purchase of DirecTV was quickly followed by price hikes, there's every reason to expect this potential tie-up would cost internet users and TV viewers dearly too."

Public Citizen president Robert Weissman also slammed the proposed deal, saying Monday, "When merger authorities get the call from AT&T asking for approval of its proposed Time Warner acquisition, they should slam down the phone in disgust."

"It aims to concentrate far too much market, communications, and political power in one corporation, threatening to impede the free flow of information, undermine the integrity of the internet, raise consumer prices, and further corrupt our politics," Weissman said.

It "would create a media behemoth with dangerous concentrations of political and economic power," says Victor Pickard, associate professor at the Annenberg School for Communication at the University of Pennsylvania and author of America's Battle for Media Democracy: The Triumph of Corporate Libertarianism and the Future of Media Reform. The deal, he argues, "deserves close regulatory scrutiny from the Justice Department."

Pickard says the proposed acquisition "could also spur a new wave of mergers between other content and distribution companies, encouraging an already highly concentrated media system to become more consolidated."

The bid has also drawn criticism from lawmakers. Sen. Al Franken (D-Minn.) for example, said Saturday that the deal "raises some immediate flags about consolidation in the media market."

Franken warned that "huge media mergers [...] can lead to higher costs, fewer choices, and even worse service for consumers."

Sen. Bernie Sanders (I-Vt.) also tweeted Sunday, "The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people."

White House hopefuls Donald Trump and Hillary Clinton also expressed concern about the deal this weekend.

According to Pickard, "This proposed deal may provide a crucial test case for whether the era of new media monopolies has begun to recede."

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