From corporate boardrooms, the proposed AT&T takeover of Time Warner may look like a great deal. A model of vertical integration, it brings together the production of news, entertainment and other content with its distribution on smartphones, computers, cable and satellite TV.
But it’s difficult to see how this $85.4 billion megamerger makes much sense for consumers.
Federal regulators should set a very high bar to allow this deal to go forward, and should be at least as skeptical as they were of Comcast’s attempted purchase of Time Warner Cable (a separate company from Time Warner Inc). After regulators raised significant questions, Comcast abandoned the deal last year. It would have put half the nation’s homes under the control of Comcast, the cable and internet giant that in 2011 took over NBCUniversal, another major content provider.
Besides the impact on customers, one crucial issue is how AT&T would handle CNN, which remains an influential news source in America and around the world. When CNN was reporting on the deal Saturday, a correspondent awkwardly joked that she just hoped that phones sold by AT&T would have a built-in CNN app.
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This is no laughing matter. The telecommunications giant has never owned a news division before, so its pledge to journalistic noninterference is essential.
Review of this deal will almost certainly go into the next administration. For one of the few times this presidential campaign, Hillary Clinton and Donald Trump agreed. Clinton’s camp called on regulators to scrutinize the deal closely, and she has pledged to be tougher on big mergers than President Barack Obama. And while Trump is wrong about a media conspiracy trying to rig the election against him, he’s right to raise red flags about concentrating too much power in the hands of too few.
Already, the merger partners are massive conglomerates. AT&T is the nation’s biggest satellite TV provider, the second-largest wireless company and one of the largest broadband internet providers. It reported an eye-popping $147 billion in revenue last year. Time Warner, one of the largest content companies, owns HBO and Warner Bros., and had $24 billion in revenues in 2015.
Also, there has already been sweeping consolidation in the media industry, and the pace is accelerating. Verizon is seeking to buy Yahoo, Lionsgate is trying to merge with Starz and now this megadeal.
Back in the days of Princess phones, Ma Bell was forced to break up its monopoly in the early 1980s, creating regional companies for local phone service, while allowing the parent company to keep long distance. Since then, the internet has transformed our lives.
But there’s no reason to abandon the principles of free and fair competition that have helped make the U.S. economy the most dynamic and resilient in the world.
Editor’s note: This editorial was corrected to distinguish between Time Warner Cable and Time Warner Inc., which separated in 2009.