AT&T & Time Warner CEOs Parry Charges That Merger Would Hurt Consumers


Critics of AT&T’s $85 billion plan to buy Time Warner put the companies’ CEOs on the defensive this morning in a Senate Judiciary Subcommittee on Antitrust, Competition Policy & Consumer Rights hearing that explored whether the deal would help or hurt consumers.

Challengers including Sen. Al Franken (D-MN) said the media giants would have “every reason” to either limit rivals’ access to popular programming, or jack up prices. following a deal.

DirecTV 2016 logo

Others added that AT&T would have more leverage to keep independent services off the DirecTV or DirecTV Now lineup, or create roadblocks for competing video providers that want to reach the telco’s wireless customers.

“AT&T is one of the dominant gatekeepers,”  Public Knowledge CEO Gene Kimmelman told the subcommittee. And in other cases, including Comcast’s acquisition of NBCUniversal, the Justice Department and FCC found that “there are enormous incentives to benefit yourself…This is not just about money. It is the diversity of programming.”

He praised AT&T’s recent introduction of DirecTV Now, which currently offers more than 100 channels for $35 a month — something that CEO Randall Stephenson cited as evidence of his company’s desire to offer consumers additional choices and lower prices.

“The online platform is opening up some,” Kimmelman says. But AT&T made the offering without Time Warner, suggesting to him that a deal would not necessarily benefit the public.

“The real fear is whether the combined company, once it looks at its overall interests, will favor itself….They may offer a better price and offer it for some time. But will the competitive process benefit?”

AT&T also could surreptitiously throttle rival services on its wireless network without others knowing — even if it agreed not to do so.

The Justice Department doesn’t “have the engineers and network experts to look at all of these issues…if there is an inclination to discriminate,” the consumer advocate says.

AT&T Time Warner Merger Congress, Washington, USA - 07 Dec 2016

Stephenson and Time Warner’s Jeff Bewkes countered today in the hearing that their union would benefit consumers by making the telco’s wireless broadband more competitive with cable operators who dominate the business.

“AT&T will continue to be a leading investor in America” including speedy 5G wireless technology, Stephenson says. “You should expect that to continue.” In addition, his company would “encourage independent journalism” as well as “a wide array of diverse high-quality content across all of our platforms.”

Bewkes says the companies would have no incentive to restrict others’ access to Time Warner content.

“We’ve been able to build our networks — CNN, HBO, TNT, Cartoon Network —  only because we have broad distribution,” he told the subcommittee. “If we were to not offer our networks over any of the cable, satellite, telco or over-the-top platforms we would be cutting off meaningful revenue. …We owned Time Warner Cable for 20 some odd years, and we managed it. It never occurred to us to do anything either restrictive or different in terms of price, position, packaging, access to networks.”

Stephenson added that Hollywood talent such as Clint Eastwood or Steven Spielberg wouldn’t do business with his company if it limits access to content. “We try to open our network to all.”

Entrepreneur Mark Cuban also testified for the deal. “We need more companies that can compete with Apple, Google, Amazon and Facebook…Alone it will be very difficult if not impossible for either [AT&T or Time Warner] to compete.”

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