Every day, the team at Next Century Cities fields questions from our members – getting communities the answers they need to make informed local decisions is one of the best parts of the job.Lately our members have been asking how they will be impacted by AT&T’s proposed acquisition of Time Warner. Here’s what you need to know:
Last week, executives from AT&T and Time Warner took to Capitol Hill to defend their proposed merger. The telecom giant has bid more than $85 billion to acquire the entertainment giant. To clear up any confusion, Time Warner is the media company that owns HBO and CNN, not the cable company – Time Warner Cable – which is a separate entity.
At a senate hearing, the CEOs of both companies rejected claims that the merger would harm competition. Senators from both parties raised concerns about potential anticompetitive harms that the merger raises such as:
– Increased cost of video programming – particularly TW-owned CNN and HBO – for rival video providers, including the municipal networks some of our members operate;
– Programmers, especially independent, minority language and niche interest programmers find it harder to negotiate carriage on AT&T’s DirecTV and U-Verse video offerings, because as distributors get larger they gain leverage in negotiations, paying programmers ever less for content;
– Zero-Rating – or exempting some applications from AT&T’s monthly data cap – but not others. Senators raised concerns that AT&T would favor it’s brand new streaming television product, DirecTV Now, but not rival online video products like Sling TV.
Since the merger’s announcement, the key question for cities in this merger has been who will judge the proposal. From the beginning, we knew the Department of Justice would review whether the merger violates antitrust law. The FCC can review communications mergers that include the exchange of a license to use the public airwaves.
Time Warner owns many licenses, but the companies recently determined that AT&T does not need to purchase them. So it will avoid FCC review. Why does this matter? The FCC judges mergers on a very broad basis, forcing companies to demonstrate that a transaction advances the public interest. To meet that standard, merging parties often create digital inclusion programs or pledge to offer low-cost broadband products. If not, the FCC might judge a merger contrary to the public interest and reject it.
Absent FCC review, the entire matter falls to the DOJ. President-elect Trump’s nominee for Attorney General has not said anything publicly about the merger, but Mr. Trump has indicated he does not approve of the merger.
Should Sen. Sessions be confirmed as Attorney General he would have to prove in court that the merger would harm competition. It’s hard to know how a court might decide a case in the future, but NCC staff will keep you up to date on this and other mergers that could impact connectivity in our communities. So stay tuned!