A Major Reason You Should Care About the AT&T/Time Warner Merger

October 24th 2016

Danielle DeCourcey

Two media giants want to merge into an even larger company, and that could directly affect the things you watch in a big way.

AT&T announced plans to buy Time Warner for $85.4 billion pending Senate hearings and regulatory approval, according to CBS News. The deal would merge one of the largest wireless and broadband providers in the country with a content titan that owns CNN, HBO, and huge movie franchises like DC Comics and Harry Potter.

However, the deal is under intense scrutiny over concerns that the merged companies could implement "zero-ratings" programs, through which wireless companies treat some content data differently than others.

The fear is that AT&T would in some ways privilege content created or owned by Time Warner. For example, it could exclusively offer Time Warner content to AT&T subscribers, or make all other content besides Time Warner's more expensive for users, Fortune's David Z. Morris argued on Sunday. These changes would hurt if you're a Verizon wireless customer who wants to watch "Game of Thrones" on a phone, or an AT&T customer who wants to watch something produced by NBC Universal.

It's also possible that AT&T could be tempted to illegally and secretly stream Time Warner content at a lower quality to its AT&T broadband customers, Morris added.

Despite these concerns, the merger could happen without any important regulatory input from the Federal Communications Commission.

Because Time Warner's broadcast station would likely be excluded from the deal, the Department of Justice may oversee this merger instead of the FCC, according to The Washington Post. That would mean that there is no reason for the FCC to be involved in the process. The DOJ focuses more on structural aspects of big mergers rather than the FCC's focus on problematic behavior for consumers. The absence of the FCC could make it easier for the potential negative aspects for consumers to make it into the final deal.

However, AT&T says the merger will give more choices to customers.

In a press release on Sunday the company said the merger would "create new customer choices — from content creation and distribution to a mobile-first experience that’s personal and social." The press release also states that the merger would provide better value for customers and provide a "stronger competitive alternative" to cable and video companies.

"We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications," Randall Stephenson, AT&T chairman and CEO, said in the press release.

The presidential candidates also weighed in on the merger.

Over the weekend, Republican presidential nominee Donald Trump said that he is dead set against the merger. “As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” he said in a speech in Gettysburg, Pennsylvania.

Brian Fallon, a spokesman for Democratic presidential nominee Hillary Clinton said that the campaign has "concerns" about the deal.

“In general, we think that marketplace competition is a good and healthy thing for consumers and so there’s a number of questions and concerns that arise in that vein about this announced deal but there’s still a lot of information that needs to come out before, before any conclusions should be reached," said Fallon, according to CBS News. "Certainly, [Clinton] thinks that regulators should scrutinize it closely.”

Former Democratic presidential candidate Sen. Bernie Sanders tweeted that the merger should be killed. He said it would lead to higher prices and fewer choices for consumers. Experts expect the official merger discussions between the companies and regulators to last for about a year before a decision is made.

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