Headlines of the past few days have heralded the potential consequences of the impending decision by a federal district judge on whether Texas-based AT&T can merge with Time Warner. Business writers say the decision will determine whether old-line media companies will have the tools to compete with tech and entertainment companies in the future, or whether those media companies will lose out, as tech giants and makers of entertainment go around the older firms to sell to viewers. And entertainment consumers will be affected too, if fewer companies consolidate to control both the means of accessing content, and the content itself.
The Justice Department is trying to stop the multibillion-dollar AT&T-Time Warner deal on antitrust grounds. A ruling is expected Tuesday.
Diane Bartz, who is covering the story for Reuters, says that if AT&T gets what it wants, the result would be a company that marries the largest pay TV provider in the country, AT&T’s DirecTV, with the content company that owns a wide array of extremely valuable cable channels, movie studios, TV shows and film libraries. AT&T is offering $85 billion for Time Warner.
Bartz says the merger is painted very differently by the two sides in the current court case, where the U.S. Justice Department has weighed in against the merger.
“What the Justice Department says is that if AT&T wins, and the deal is approved, AT&T will be able to turn around and say [to competing cable companies that carry Time Warner channels, like CNN] ‘we’re not so sure we’re going to let you have this content,” she says.
AT&T could charge higher prices to carry those channels, or could keep them for AT&T-owned services like DirecTV and U-Verse.
AT&T counters that the licensing fees Time Warner earns from allowing other providers to carry its channels are valuable to the company, and that they would not black out competing providers.
Bartz says that Comcast is probably the company that comes closest to AT&T in terms of reach, and breadth of properties. The cable provider owns NBCUniversal, and operates cable systems, many of them exclusive, around the country.
“Maybe they’re not a monopoly, but they have really big market share,” Bartz says.
Besides traditional cable or satellite providers, AT&T is looking to stave off challenges from Google, Amazon, Netflix and Apple, all of which offer some combination of content and Internet access that appeals to consumers who have either dumped their cable subscription, reduced the time they spend watching traditional cable channels, or both.
Written by Shelly Brisbin.