Netflix CEO Wary That AT&T's Latest Merger Could Hurt Streaming Competitors

from the now-witness-the-firepower-of-this-fully-armed-and-operational-battle-station dept

Wed, Oct 26th 2016 6:23am — Karl Bode

Streaming video competitors are justifiably nervous about AT&T's $85 billion acquisition of Time Warner. Consumer advocates have been raising alarm bells since the deal was announced, warning that AT&T could make it more difficult than ever for streaming providers to gain access to the content they'll need to compete with AT&T's upcoming DirecTV Now streaming service. They're also concerned that AT&T will continue to use zero rating to give its own content a distinct advantage, while penalizing streaming competitors like Netflix and Amazon.

Speaking at the Wall Street Journal's WSJ.D Live conference this week, Netflix CEO Reed Hastings made it clear that he's a bit worried that AT&T will give Time Warner-owned HBO specifically an unfair leg up in the market (warning: annoying autoplaying video):

"We want to require that for AT&T customers, that HBO and Netflix are treated the same," said Hastings in an exclusive interview with CNBC at the WSJ D Conference. "Now that they're going to own HBO we think that any special treatment for HBO data would be inappropriate, but I think that's pretty basic."

Basic, but not likely. AT&T has already made it clear that it intends to exempt its new DirecTV service from usage caps, and the FCC has made it equally clear that it has no intention of doing anything about this new tilted playing field we've constructed. Yes, we've passed net neutrality rules in the States, but it's beginning to look more like we have no intention of actually enforcing them in any meaningful capacity. As a result, companies like AT&T, Verizon and Comcast are now giving their own content a leg up while regulators twiddle their thumbs.

Hastings doesn't want his stock to take a hit, so he joked that while things could get tougher for Netflix in the face of a larger AT&T, the company could benefit by sopping up the employees fleeing the mega-union:

"There's a lot of AT&T investment in content, that could make things tougher," said Hastings. "On the other hand it's probably going to get easier for us to recruit Time Warner executives, which are a very talented bunch."

Hastings also made it clear that while AT&T continues to believe that mergers and acquisitions are the path to the promised land, Netflix will remain focused on generating original content (so it's not beholden to the whims of broadcasters) and developing a service people actually want to use:

"That's what made us successful for the last 14 years is we've done no M&A. We've stayed out of all those discussions. We don't do bankers meetings. We're very old school in that way," said Hastings. "Let's just build the greatest service on earth, and again, it's done very well for our shareholders."

While zero rating is an extremely bad idea for consumers and emerging markets, many consumers still don't quite understand what's wrong with the concept, enticed by the false idea that the concept gives them something for free. What it actually gives them is a new environment where the biggest companies get to use their monopoly over broadband markets to give their content arms an unfair leg up in the market. Assuming the deal is approved with the usual flimsy conditions attached to these kinds of deals, consumers are about to get a front row seat to witness precisely what this looks like.

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Filed Under: gatekeepers, merger, streaming
Companies: at&t, netflix, time warner

31 Comments

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Anonymous Coward, 26 Oct 2016 @ 6:52am

I'd like to think if the tables were turned and Netflix was the one buying a large cable internet provider, AT&T would be throwing the biggest fit about how unfair it was.
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Anonymous Coward, 26 Oct 2016 @ 6:57am

Soon after TWC merged with Charter our monthly bill went up by $5/month. It seems after every merger prices have only increased. It's obvious what these mergers are about and they're not about consumer satisfaction. They're about higher prices.
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Anonymous Coward, 26 Oct 2016 @ 7:11am

Total Control
Considering that AT&T is essentially a full partner with the government, I see this as just another step towards the full control of everything the sheeple see and hear that many in the government so clearly desire.
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Anonymous Coward, 26 Oct 2016 @ 7:21am

Well, AT&T customers will at least be able to exchange emails with non ATA&T customers, at least for now.

/sarc
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Anonymous Coward, 26 Oct 2016 @ 7:28am

Re: Total Control
Why not?

We asked for it!

Every Nation gets the Government it Deserves!
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JBDragon (profile), 26 Oct 2016 @ 7:29am

I just got my Comcast letter in the mail about the new 1TB Usage CAP, and the whole load of crap. Of course showing my usage as over that CAP currently. But the dumb listings of you can watch this many HD movies, and so on. All it's really about is them not wanting to become just a dumb pipe!!! If you want to get your TV from someone else, they don't like that. This is their way of stopping that or making you PAY a lot more.

You want to get your unlimited BACK, now it's another $50 a month. Otherwise it's $10 for so many Meg's up to $200. So it doesn't even stop at that $50, but they let it go on for the whole $200 more. It's such a huge scam. It has nothing to do with FAIRNESS and all about protecting their TV service.
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JustShutUpAndObey, 26 Oct 2016 @ 7:41am

Could Hurt?
Could Hurt competitors? Pretty sure that is the entire intent.
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Skatterbrained, 26 Oct 2016 @ 8:25am

Opportunity for Netflix and Google Fiber...
Hmmm, perhaps Netflix should talk to Google about a Netflix/Google Fiber spinoff to provide low-cost, true unlimited internet for 50 a month, including the Netflix basic package.
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Michael, 26 Oct 2016 @ 8:28am

Re:
For a small additional fee.
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Jeffrey Nonken (profile), 26 Oct 2016 @ 8:29am

+1 for the death star reference.

clicky

clicky
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Jeffrey Nonken (profile), 26 Oct 2016 @ 8:32am

Ok why didn't those work? Sigh.

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcS-_mdrHC1C93cdeJFq3fmEBQhpicg0kyZQ1GO4XO-uuwsC g9gU

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQRG1oipHOcQdwQt1J34DEmQVcda6vhpPfJvERNnAEe Xg-6bemV
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Padpaw (profile), 26 Oct 2016 @ 8:34am

How much will AT&T be bribing senators with after their merger I wonder. Will have to be at least slightly higher than what they use now to make them turn traitor and throw their fellow citizens under the bus for cash payoffs.
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Anonymous Coward, 26 Oct 2016 @ 8:40am

Re: Opportunity for Netflix and Google Fiber...
Its too soon in Google's expansion planes for that to have any effect, except justifying AT&T's use of zero rating, and throttling of Netflix traffic..
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Anonymous Coward, 26 Oct 2016 @ 8:46am

Re: Opportunity for Netflix and Google Fiber...
I think Comcast buying Netflix is much higher likelihood after this AT&T and HBO news. Then they can set it up so Netflix (even 4K) is part of their zero rating offering (at a much higher monthly cost of course).

That would be a huge win for them.
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Ninja (profile), 26 Oct 2016 @ 8:52am

Re:
And you can't pay for the unlimited version and keep your connection maxed to make they spend more money. The cost difference of using all the pipe or none is negligible.
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Ninja (profile), 26 Oct 2016 @ 8:58am

Re: Opportunity for Netflix and Google Fiber...
Besides giving a bad example there's another problem: AT&T will also own the copyrights. If copyright laws were fair and actually about benefiting the public this wouldn't be an issue because they would need to license the content at the same prices regardless of who ask for. But as things are now they can prevent content from reaching other distribution channels effectively crippling competition. That's why Netflix is investing heavily in original content.

Of course Netflix is creating this same problem with its content unless there is availability for it outside of Netflix itself. So the only fix to this idiocy is to actually enforce equality via changes to copyright law. Chances of this happening are zero at best. Or getting even worse.
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Anonymous Coward, 26 Oct 2016 @ 9:42am

Re:
I have occasionally thought that becoming a large ISP would be Netflix's primary hope for survival in a world of large ISPs that want to make it extinct.
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Anonymous Coward, 26 Oct 2016 @ 9:52am

Already started seeing articles probably bought by AT&T championing the merger. The title was "Why a Media Merger That Should Go Through Might Not" at the New York Times.

Mentally I just read it as "Why a Media Merger That Might Go Through Should Not"
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NaBUru38 (profile), 26 Oct 2016 @ 9:58am

By the way, the AT&T - Warner merger does have reasons to be inspected by the FCC, as Warner Bros is co-owner of The CW broadcast network.
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Anonymous Coward, 26 Oct 2016 @ 10:35am

AT&T needs to be broken up again just like back in 1982. Deja-vu anyone?
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Anonymous Coward, 26 Oct 2016 @ 10:56am

Re:
Most people have forgotten about this so....Mission Accomplished!
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Anonymous Coward, 26 Oct 2016 @ 11:22am

Re: Re:
I didn't know dinosaurs used telephones back then.
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michael, 26 Oct 2016 @ 11:31am

Best possible outcome ...
Best possible outcome ...

Google, Netflix, and Apple join together to buy up any remaining smaller ISPs (including Cox) and charge a reasonable amount with no usage caps. Then Comcast, AT&T, and TW and explain to Congress why most of the country has shitty service that costs more.

Yes, it's just a fantasy. But it would be fantastic.
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ECA (profile), 26 Oct 2016 @ 11:50am

The MORE 1 company
The MORE 1 company OWNS...
The MORE 1 company Conspires..

The more they GET the MORE control they will have..
Suggest you all ASK, WHO AT&T is..who they OWN and WHO owns them..
That will give you 1 BIG answer..
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Anonymous Coward, 26 Oct 2016 @ 1:57pm

Re: Re: Total Control
> We asked for it!

Speak for yourself.
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Anonymous Coward, 26 Oct 2016 @ 2:01pm

Re: Opportunity for Netflix and Google Fiber...
Maybe you didn't see the news today about Google announcing that they're putting new fiber deployments on indefinite hold and laying people off.
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Anonymous Coward, 26 Oct 2016 @ 2:03pm

Re:
AT&T needs to be broken up again just like back in 1982. Deja-vu anyone?

Because that worked so well last time?
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Anonymous Coward, 26 Oct 2016 @ 2:56pm

Re: The MORE 1 company
Disney!
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Anonymous Coward, 26 Oct 2016 @ 10:56pm

No worries, as soon as they are too big to fail they will.
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Aaron Walkhouse (profile), 27 Oct 2016 @ 5:03am

Now that more of the public is being capped…
…it's about time the FCC start talking about their bogus rationale. ‌ ;]
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mb (profile), 27 Oct 2016 @ 10:19am

Mandatory Licensing and Net Neutrality
solves most of the concerns with these shennanigans. If registration was required for copyright so that all media was available from all providers, it wouldn't really matter who the provider was. The business would go to whomever could provide the best rates and services.

Problem solved.
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