AT&T chief executive Randall Stephenson vowed Wednesday not to restrict Time Warner's television content from competitors once the two companies close their massive $85 billion merger.
The $85.4 billion deal, announced in October, is subject to regulatory approval from the Justice Department and possibly the Federal Communications Commission. The transaction would join the country’s largest pay-TV provider with one of America’s biggest entertainment conglomerates. It has raised concerns among consumer advocates who say the tie-up would allow AT&T to hurt competitors. And it has attracted the ire of President-elect Donald Trump, who during his campaign pledged to block the acquisition if he were elected.
Under the deal, which will see AT&T acquire a deep trove of content rights ranging from HBO TV shows to Warner Bros. films, the telecom giant could wield its expanded power as a cudgel against other businesses. That could raise costs to other TV companies or potentially allow AT&T to prioritize its own services, such as DirecTV, critics say. AT&T, opponents of the merger argue, could force other companies to pay higher license fees to air its programming, for example, or restrict other companies' ability to show that content if they do not agree to AT&T's terms.
“There's concern this acquisition will concentrate too much power in one conglomerate, resulting in higher prices and fewer programming options for consumers,” said Sen. Charles E. Grassley (R-Iowa).
Consumer advocates say that any discriminatory behavior on the part of AT&T would disproportionately hurt smaller TV companies.
“I'm not worried about Comcast getting access to content,” said Gene Kimmelman, president of the consumer group Public Knowledge. “I'm worried about the online distribution that would be competing with AT&T,” such as Netflix.
There is some precedent for these concerns. In 1992, Congress passed a law that, among other things, required cable companies to make any content they owned available to competing technologies, as well — specifically, satellite TV. The worry was that cable channels would find ways to cut satellite providers out of the content market and ultimately hurt the industry.
Despite the rules, some content owners still found ways to discriminate by taking advantage of loopholes in the law, said Harold Feld, a senior vice president at Public Knowledge. “This led to Comcast and Time Warner actively buying up all local sports rights and creating 'regional sports networks' that they denied to [satellite] and other competitors,” Feld said. The Federal Communications Commission closed that loophole in 2010.
After 20 years, federal regulators allowed those rules to expire in 2012. Pay-TV providers such as satellite companies can still file a complaint if they believe a cable company is negotiating unfairly over content rights. But in general, the rules are a little looser than before.
Time Warner chief executive Jeff Bewkes told lawmakers Wednesday that it would not be in the company's interest to deny content to other companies — not when cord-cutting is forcing TV providers to distribute their programs on as many platforms as possible.
“We would be cutting off meaningful revenue for our company,” Bewkes said. “There's no incentive to do that … it would hurt our business.”
