Tags: Donald Trump | Media Bias | AT&T | Time Warner | monopoly | antitrust

Consumers Big Losers in AT&T, Time Warner Merger, Warn US Senators

Consumers Big Losers in AT&T, Time Warner Merger, Warn US Senators

Sen. Mike Lee, R-Utah, speaks Wednesday on Capitol Hill, during a hearing on the proposed merger between AT&T and Time Warner. (AP Photo/Evan Vucci)

By    |   Wednesday, 07 December 2016 10:45 PM

A dramatic collision between huge media conglomerates and the strong populist wave that lifted Donald J. Trump to the presidency took place Wednesday, as key U.S. senators on both sides of the aisle grilled AT&T and Time Warner executives over their proposed $85 billion merger.

President-elect Trump has already branded the deal as "an example of the power structure I am fighting."

Now regulators on Capitol Hill fear a marriage between Time Warner, a powerful content provider, and the massive distribution system of AT&T will lead to self-dealing and anti-competitive behavior.

AT&T already has 26 million pay TV customers – or about 25 percent of the U.S. cable TV market – and nearly 130 million wireless subscribers. AT&T owns DirecTV and AT&T U-verse, both paid cable/satellite TV services.

Time Warner is one of just six companies that control 90 percent of the network offerings on cable television. The others are Viacom, CBS, ABC, Comcast-NBC, and 21st Century Fox.

At a Senate Judiciary antitrust subcommittee hearing Wednesday, chaired by Sen. Mike Lee, R-Utah, senators from both parties voiced serious skepticism about the deal.

"The companies claim that this acquisition will result in significant benefits for consumers," Sen. Lee noted during the hearing, but he voiced strong concerns AT&T might be tempted to raise the price of Time Warner's content, including HBO, Turner Broadcasting, and Warner Bros.

Sen. Chuck Grassley, R-Iowa, the chairman of the full Judiciary Committee, said the communications business "is going through a transformation," adding: "We want to make sure that this revolution in technology and in content continues to evolve and thrive."

The senator added, "There's concern about the merged company's ability to employ 'bullying' tactics to dictate rates and terms to other networks.

"There's concern that this acquisition will concentrate too much power into one conglomerate, resulting in higher prices and fewer programming options for consumers. There's also concern about the merger's implications for a free and diverse press."

In an apparent reference to Newsmax TV, Grassley said he was disappointed AT&T and DirecTV had removed a favorite network "Channel 349." Newsmax TV aired on Channel 349 for two years before AT&T removed it from its lineup this summer.

Democrats on the committee joined with conservatives in questioning the benefits of the deal.

Time Warner CEO Jeffrey Bewkes told Sen. Al Franken, D-Minn., "the market's way too competitive" to support monopolistic price hikes. But Franken appeared to reject those assurances, stating, "Nothing would stop AT&T from charging a competitor double for Time Warner content like HBO."

"I don't think the hypothetical is outlandish . . . this is the incentive that is created by the merger," Franken said.

Sen. Richard Blumenthal, D-Conn., voiced strident criticism as well, stating, "I have yet to be convinced that the benefits outweigh the harms to competition and possibly to consumers."

AT&T CEO Randall Stephenson and Bewkes tried to allay fears the new company would be too powerful. Stephenson told the senators the goal of the merger is "to get the most content to the most people at the lowest prices."

AT&T was considered a major corporate supporter and bundler for Hillary Clinton during the campaign, although she also voiced opposition to the deal.

Time Warner owns CNN. Critics blasted CNN as the "Clinton News Network" during the campaign due to a strong perceived anti-Trump bias.

AT&T executives insist they will not tinker with CNN's editorial decisions should the merger go through.

Currently, AT&T dominates the cable/satellite market. With the largest market share, the company also just rolled out DirectTV Now, which is offering over 100 channels at a cut-rate introductory price of $35 per month in a bid to amass some 130 million mobile phone users. Critics say this move will only increase AT&T's dominance over the market.

Tech entrepreneur and Shark Tank TV panelist Mark Cuban, a Trump antagonist during the campaign who supported Clinton, also appeared before the committee. He told senators the real distribution power rests with tech giants Apple, Google, Amazon, Microsoft, and Facebook.

Cuban testified it will be "very difficult, if not impossible" for AT&T or Time Warner to survive as standalone companies when pitted against those technological goliaths.

But Gene Kimmelman, president and CEO of the advocacy group Public Knowledge, testified the high-tech companies that dominate online shopping and social media ultimately must depend on wireless and broadband paths controlled by a few dominant telecommunications giants, such as AT&T, to reach their customers.

"There are too few players already in these markets," Kimmelman said.

"If a single company is able to control so many key inputs to online video, from content production to last-mile transmission, then the competitive promise of this new market could be snuffed out, or at least limited," he added.

Sen. Franken also noted the Comcast merger with NBC, a similar vertical deal. Comcast flouted numerous conditions it had agreed to as part of the merger.

Although the senators' commentary is considered an influential indicator of public opinion, the Trump administration's Justice Department is expected to have the final say on the deal.

The FCC could play a role as well, and would be expected to subject the deal to tough scrutiny based on whether it is in the public's best interest. But the companies reportedly might divest any broadcast licenses that would trigger an FCC review.

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A dramatic collision between huge media conglomerates and the strong populist wave that lifted Donald J. Trump to the presidency took place Wednesday, as key U.S. senators on both sides of the aisle grilled AT&T and Time Warner executives over their proposed $85 billion merger.
AT&T, Time Warner, monopoly, antitrust
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2016-45-07
Wednesday, 07 December 2016 10:45 PM
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