Five Things to Know About the U.S. Case Against AT&T-Time Warner
November 21 2017 - 5:59AM
Dow Jones News
By Drew FitzGerald
Covering New Ground
The Justice Department rarely challenges "vertical" mergers, a
term for deals that combine two companies that operate at different
stages of a supply chain. The suit argues this vertical merger is
"unusually problematic" because AT&T, which owns DirecTV, would
control Time Warner content that could make rivals less
competitive. AT&T says the suit goes against legal precedent
and stretches antitrust law "beyond belief."
The One That Got Away
Opponents of corporate consolidation often argue the government
didn't do enough to limit Comcast Corp.'s power when it took
control of NBCUniversal in 2011. That combination, which became a
model for AT&T's purchase of Time Warner, is now back in the
limelight. Monday's lawsuit says AT&T and Comcast would
together control almost half of the country's TV-distribution
market.
Cord-Cutters Cut Both Ways
Many Americans "cut the cord" this year by dropping cable TV or
satellite service and replacing it with cheaper online TV packages
delivered over the internet. AT&T argues its streaming service,
DirecTV Now, is proof it's enhancing competition. The government
says the merger can do the opposite, "substantially lessening
competition among traditional video distributors and slowing
emerging online competition," like Dish Network's Sling TV.
Elephant in the Room
The government's complaint barely mentions CNN, but President
Donald Trump's public disdain of the news network's coverage has
loomed over the merger review for more than a year. The Justice
Department has denied any political influence. AT&T CEO Randall
Stephenson on Monday hinted he wasn't so sure but insisted that the
company wouldn't part with CNN to secure approval. "Any agreement
forfeiting CNN, directly or non-directly, is a nonstarter," he
said.
It Isn't TV, It's Premium
AT&T sees adding Time Warner's HBO and its award-winning
shows as a strength. The Justice Department says it's too strong,
allowing the telecom giant to use HBO to lure new customers to its
wireless, satellite and broadband services in ways that other
distributors won't be able to match. The department says other
premium TV channels like Starz or Showtime "are not adequate
alternatives to HBO" in that sense.
(END) Dow Jones Newswires
November 21, 2017 05:44 ET (10:44 GMT)
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