US lawmakers grilled chief executives of AT&T Inc. and Time Warner Inc. about whether their proposed tie-up would benefit consumers and called for antitrust officials to closely scrutinize potential competitive harm from the deal.
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Mike Lee, R-Utah, speaks on Capitol Hill in Washington, Wednesday, Dec. 7, 2016, during the subcommittee’s hearing on the proposed merger between AT&T and Time Warner.
“By owning Time Warner content, we will be able to innovate more quickly, experiment more readily, tweak our offerings as we gauge customer response and bring consumers the options they seek”, Stephenson said at the hearing.
Mark Cuban said that AT&T and Time Warner aren’t really in a dominant position in the media market.
He said that there would be “no incentive” for the combined company to withhold content from competitors because “we would be cutting off meaningful revenue”. “Franken has been an outspoken critic of mergers and acquisitions run amuck, especially in the communications space”, Matt Wood, policy director at Free Press, a public interest group, told Bloomberg BNA.
The Justice Department will put the deal under intense scrutiny in coming weeks.
Blumenthal said he might agree with Trump’s opposition to the deal as too much concentration.
Sen. Amy Klobuchar (D-Minn.), ranking member of the subcommittee, said she’s concerned the tie-up might undermine competition and drive up prices for consumers.
Gene Kimmelman, CEO of Public Knowledge, a group promoting open internet and consumers rights, said a smaller merger of Comcast and NBC Universal had not produced lower prices for consumers and had led to court battles over discriminatory placement of shows. Based on the recent controversy surrounding AT&T giving priority to its own DirectTV Now streaming videos, however, it’s hard to imagine that AT&T will miss the chance to get a leg up against its competition.
AT&T’s plunge into media with the Time Warner deal is in part to relieve pressure facing its maturing wireless business and customer erosion in video. But the FCC’s involvement in this merger is unclear – the agency wouldn’t have direct oversight power if the deal did not involve FCC licenses issued to Time Warner, and AT&T has yet to reveal whether it will dump such licenses from the transaction.
When asked about concerns that the company’s DirecTV Now service – which offers its video to AT&T mobile customers without eating into their data – might be anticompetitive, Stephenson likened it to toll-free long-distance calling.
He argued that it DirecTV Now already was having an impact on the industry, citing CBS’s decision to add National Football League games to its All Access service at no additional charge as the type of action taken in response to competition. Franken described any cost incurred by DirecTV to get on AT&T’s wireless network as merely shifting money from one pocket to another, a kind of accounting fiction that ultimately conceals AT&T’s gain to the detriment of rival mobile video services. Stephenson said he would make internal data available to the Justice Department, and told the Senate panel AT&T does not discriminate against other services.
And indeed, when two companies merge, there is always concern that the resulting entity may use its increased size to raise prices or reduce service.
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AT&T and Time-Warner announced their deal in late October. In considering the implications of this deal, policymakers should take into account not just the effects on competition, but the effects on consumer access to information, as well.
