AT&T & Time Warner Versus Consumers With Pitchforks

Everybody needs to slow their roll. Teddy Roosevelt is not walking through that door.

 (Photo credit: SAUL LOEB,STAN HONDA/AFP/Getty Images)

(Photo credit: SAUL LOEB,STAN HONDA/AFP/Getty Images)

The proposed merger between AT&T and Time Warner will probably be approved for two reasons:

1. Vertical mergers are usually approved. Note that Comcast and NBC are now the same thing.

2. Restrictions can be written to address most top level concerns. Note Comcast agreeing to restrictions in how it manages Hulu, and ignore the bit where Comcast ignored the DOJ.

Consumer advocacy groups are already up in arms over this latest media conglomeration. This is a fun thing to bitch about, because it touches all of our hot button concerns over the anti-competitive nature of giant corporations. Do you hate your cable company? Of course you do. Do you hate your phone company? Well, you’re not texting them a Holiday card. Do you want to pay more to see Game of Thrones if you are not on the AT&T network? Nobody wants that. Consumer protection groups want regulators to throw Wildfire on this deal.

Competitors to AT&T are worried that AT&T will makes Time Warner content exclusive to the network. Competitors to Time Warner are afraid that AT&T will restrict distribution of their content. Net Neutrality people are going to invest real time and bitcoins looking at this deal. Senator Al Franken has come out and said that huge mergers “can lead to higher costs, fewer choices, and even worse service for consumers.” Vice Presidential candidate Tim Kaine said that the merger raises “concerns.” And Donald Trump said that he would try to “block” the merger if elected, once again seeming to think that winning the Presidential election would vest sole authority over the Earth unto his person.

You might remember that AT&T tired and failed to merge with T-Mobile a while back. With powerful forces already being arrayed against the proposed AT&T/Time Warner mashup, markets seem to think that this too will be stopped.

Sponsored

Everybody needs to slow their roll. Teddy Roosevelt is not walking through that door. And if he did he’d find that antitrust regulations are much more nuanced than pitchfork wielding consumers who are bummed out over their cable bill.

What happens next is that the Department of Justice, Antitrust division will review the terms of the merger. This probably won’t be reviewed by the FCC, because the Time Warner end of this doesn’t really come under FCC purview. That’s a really important distinction. From Ars Technica:

The DOJ and FCC follow very different processes when reviewing mergers. The FCC can block a merger if it doesn’t serve the public interest, and the burden is on the merging parties to prove that Americans will benefit.

The DOJ can block mergers by suing in federal court, but the federal agency faces the burden of proof and must convince a court that the merger would violate antitrust laws.

That’s not to say that a DOJ review is toothless. Aetena and Humana can tell you something about that.

What will probably happen is some kind of consent decree that allows the merger to go forward. Net Neutrality will have to be written into that. Perhaps some kind of “wall” between Time Warner and AT&T. Or between Time Warner and DirectTV (which is owned by AT&T already). AT&T and Time Warner will agree to running their business in a certain way to satisfy regulators and move forward with the deal.

Sponsored

While I too would like to stab my cable provider in the eye — I have DirectTV, which means it’s 2016 and I can’t reliably watch television when it’s wet outside — let me put in a small consumer plug for a vertical integration of content and telecom that old people and politicians might not understand:

I WATCH TV ON MY PHONE NOW! OR MY IPAD! BECAUSE WE LIVE IN THE FUTURE! Honestly, maybe once a week I will sit on my couch and watch a program with my family: and that program is usually Sesame Street or Paw Patrol or something else that will keep my kids quiet while I sit on my couch WATCHING FOOTBALL ON MY PHONE. I can’t stand it when I’m trying to watch something and it says that I can only watch it on my physical television. I’m playing Minecraft on that screen. But I want to keep Maddow on my phone while Twitter is up on my laptop. LIFE IS BUSY.

To the extent that AT&T and Time Warner can come together and make it easier for me to have 8 screens simultaneous streaming media to my brain at the same time, I’m all for it. The distinction between my device and my television is already obsolete, and there’s a chance consumers would benefit from content distributors catching up to that face.

So, people, let’s wait and see what the regulators say before we lose our minds over AT&T/Time Warner. It could be horrible, but it probably can’t be worse.

AT&T Plans Media-Telecom Mix With $85.4 Billion Time Warner Deal [Bloomberg]
AT&T/Time Warner deal could be approved without any FCC merger review [Ars Technica]
A merged AT&T-Time Warner may not do consumers much good [Chiacago Tribune]