By Charmaine Pequeno
Earlier this week, AT&T announced its plans to merge with Time Warner Cable. AT&T is a multinational telecommunications conglomerate that already controls a diverse line of companies and products – from the mobile phone industry to the broadband internet industry. Time Warner Inc. is known as an American multinational media and entertainment conglomerate that focuses on movie and television production, cable television, and broadcasting. Time Warner is made up of three separate subdivisions: HBO, Turner Broadcasting System Inc., and Warner Bros. The proposed plan comes with a price tag of $85.4 billion and would take AT&T levels above their competitors. If the deal goes through, AT&T would gain ownership of Time Warner’s most popular productions like the Harry Potter movie series, NBA basketball on TNT, and their most popular franchises that include Superman and Batman. All of this new content could soon be easily available on AT&T’s DirecTV, their satellite television service.
At a time when the telecom industry is experiencing little growth, companies have to find creative ways to bring in revenue and stay competitive in the market. Merging with content companies is an attractive option for these telecom companies. If this merge goes through and is successful, AT&T will reign in on the extra revenue from licensing agreements to stream Time Warner’s content to online streaming websites. Also, Time Warner’s Chairman and CEO Jeff Bawkes sees this merge as a great opportunity which would allow their content to be available on mobile devices. Mobile streaming has increasingly become the norm today because of how convenient it is to view shows and movies on the go. Going mobile with Time Warner’s content would be a major perk to the public and the companies would further expand their reach in the market.
Critics predict that regulators will not allow this merger and that they will protect the public from anti-competitive behavior. Tim Kaine, Vice-President Nominee, expressed his concern on “Meet the Press” that a big merge like this would increase concentration in the media. Kaine brings up a crucial point that the ownership of media companies is now in the hands of few and bigger companies. AT&T is already a huge conglomerate that owns several subsidiaries. In addition, they are currently the second-largest wireless data provider and the third-largest broadband provider. Alongside Kaine stands Hillary Clinton, Donald Trump, and Bernie Sanders against this proposed merger.
However, AT&T’s Chairman and CEO Randall Stephenson argues that this merger will be an example of vertical integration, rather than a form of horizontal integration. The argument is that both companies are not in the same industry. Time Warner would be a supplier for AT&T by providing content and AT&T will be the distributor. Will this stance be enough for the merge to be approved or will policymakers see this merge as antitrust behavior? We’ll just have to wait and see what the regulators from the Department of Justice and the Federal Communications Commission decide.