Last year on Oct. 22, AT&T, an American multinational telecommunication company bought Time Warner, an American cable television company, for $85.4 billion. AT&T’s acquisition of Time Warner is considered to be the greatest media deal in history.
On October this year, the U.S Justice Department was reportedly considering a lawsuit to prevent the merging of two corporations.
The primary objection to the acquisition is that it would allow the combined AT&T-Time Warner company to control both the creation and the distribution of media and entertainment content. The deal would put Time Warner’s content such as HBO, CNN and Warner Bros. under the same umbrella as AT&T’s content, which includes internet services, DirecTV and wireless services.
Competitors such as the American Cable Association (ACA), which represents smaller cable operators, are concerned that that such a merger could create a powerful monopoly in the communications and entertainment market.
The AT&T-Time Warner fusion could give preferential treatment to its own entertainment and media content over its rivals. The company can also prevent its competitors from buying their content.
The U.S Justice Department has been in ongoing talks with AT&T for the approval of the merge, under a settlement that would force the company to abide by certain regulations. The Justice Department’s threat is stalling the negotiation and may be an effort to persuade AT&T to agree to the proposed regulations.
AT&T’s CEO, Randall L. Stephenson said, “For over 40 years, vertical mergers like this one have always been approved, because they benefit consumers without removing any competitors from the market. While we won’t comment on our discussions with the Department of Justice, we see no reason in the law or the facts why this transaction should be an exception.”
Some of the conditions may include requiring Time Warner’s content to remain readily available to other telecom companies. Others may force AT&T’s delivery service not to discriminate against Time Warner’s competitors.
President Donald Trump said that AT&T’s acquisition of Time Warner puts “too much concentration of power in the hands of too few,” and pledged to block the deal.
In an attempt to alleviate concerns, AT&T announced that it would establish a new media group that would be completely separate from its wireless, broadband, and television operations.
Analysts predicted mixed implications for consumers. While a combined AT&T-Time Warner could offer a new type of video content and a new rival to cable television, it could also bring the risk of higher prices and exclusive content.