Issue in Focus
Dec 09 2016
We are living in a golden age of television. One TV writer recently wrote that for “the first time I’ve beg[un] to feel like there may, in fact, be too much good TV.”
The creativity, however, is not limited to content creators. Networks and distributors are also innovating to allow consumers new and unprecedented access to their content of choice. No longer are consumers limited to whatever bundle their local cable operator has negotiated. Dish, Sony, and DirecTV all offer cable bundles allowing consumers to stream live television over the Internet. Netflix, Amazon, HBO, and CBS, among others, allow consumers to purchase programming directly. And more innovation is on the horizon, as many industry participants expect 5G wireless technology to provide more competition to broadband and landline cable, opening up even more possibilities to content creators and distributors.
This brings us to AT&T’s proposed $85 billion acquisition of Time Warner.
AT&T is the second-largest wireless carrier in the United States and, through its DirecTV and U-verse subsidiaries, the largest U.S. cable and satellite provider. Time Warner is currently the world’s third-largest television network and filmed TV entertainment company, including CNN, TNT, HBO, and Warner Brothers’ film and TV studio.
The companies claim that this acquisition will result in significant benefits for consumers, including a “stronger competitive alternative to cable and other video providers” and a significant competitor to the digital advertising giants Google and Facebook.
Some critics claim the merger could stifle the development of new content delivery systems like Sling and PlayStation Vue, which allow customers to watch a live stream of cable channels via their Internet connection. The worry being that the new AT&T-Time Warner entity would withhold HBO or CNN from these new firms.
Other critics worry that AT&T will unduly favor Time Warner content by not counting that content against the wireless customers’ data caps. More commonly known as “zero-rating” the FCC recently found that the practice “may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T.”
The issues raised by this deal are complicated and, like most antitrust analysis, very fact intensive, which is why the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights held a hearing on the proposed merger earlier this week.
The Antitrust Subcommittee, which I chair, does not render any final judgment on the proposed merger, that responsibility lies with the Department of Justice’s Antitrust Division and the Federal Trade Commission.
But we will continue to monitor the issue and make sure the next administration enforces our nation’s antitrust laws properly.