Cable Companies Warn In Court That AT&T Time Warner Merger Will Be Absolutely Terrible For Competition And Consumers
from the Synergies,-yo dept
AT&T and the Department of Justice are ramping up their legal arguments in court as the DOJ tries to block the company's $86 billion acquisition of Time Warner. While some question the DOJ's real motives in the case (Trump ally Rupert Murdoch has been lobbying against the deal for competitive reasons for a year), consumer advocates agree that the deal will be horrible for consumers and competitors alike. AT&T already has a long, epic history of anti-consumer behavior, and critics charge the greater leverage will only let AT&T jack up licensing costs for competitors trying to compete with AT&T's own streaming services.
To glean support for its unpopular merger, AT&T offered a special deal to 1,000 of its competitors. According to AT&T's proposal, if competitors agreed to support the merger, the company promised send any price disputes with other cable companies to an outside arbitration process. Most competitors were pretty clearly not impressed:
"But thus far, only 2 percent of AT&T's rivals have expressed support for that plan, according to lawyers for both sides. The revelation came as AT&T and the Department of Justice faced off in court Tuesday, the second day of a trial whose consequences will reverberate across the economy. Of the 1,000 letters sent by AT&T to competing TV providers in November notifying them of the proposal, just 20 received a positive response, according to company and government lawyers."
Many of those same competitors have been called to testify against the merger on behalf of the DOJ, and their comments this week were not what you'd call positive. Dish and its subsidiary Sling TV, for example, were quick to argue that AT&T simply has no incentive to offer reasonable licensing terms to streaming competitors like Sling once the deal's done:
If the merger goes through, Time Warner’s incentives change, according to Schlichting. It could demand higher rates or onerous terms, such as requiring Sling to buy more channels, and would be less likely to compromise, he said. Either Dish’s costs would go up, or if there’s no agreement and Turner channels “go dark,” the company would lose subscribers who would likely switch to DirecTV or its DirecTV Now online service, Schlichting argued. Gaining subscribers would be more lucrative for AT&T than programming fees, he said.
“I just don’t see them having any motivation to move” to get to a deal, he said of Time Warner.
Cable competitor Cox Communications had similar words of warning, noting that AT&T's promise for outside arbitration was a "little bit of gamesmanship," and that losing access to needed content soon to be owned by AT&T could "significantly impact the viability of our business model." DOJ lawyers have warned that if the AT&T Time Warner deal is allowed to proceed, consumer bills could skyrocket to the tune of $436 million annually. Tim Wu, the Columbia law professor who coined the term net neutrality, put things rather succinctly in a New York Times piece this week:
"The (DOJ $436 estimate underestimates) the full costs of this merger to the American public. What we really have here is a brazen effort to prolong the life of a dying business model — “full-service” pay TV — by making “cord-cutting” more expensive, and thereby strangling a revolution in internet television that remains in its toddlerhood. Even worse, greenlighting the deal could set off a domino effect."
While some of these potential pitfalls can be stymied by conditions, meaningful conditions haven't been a strong suit for either party of U.S. governance. More often than not, the companies merging volunteer their own conditions routinely made up of "goals" they would have accomplished anyway. While politicians pretend to be holding these companies' feet to the fire for political brownie points, enforcement is routinely non-existent. As a result, merged companies (especially in the traditionally regulatory capture protected cable and broadband industries) still somehow fail to adhere to them.
Years go by, everybody forgets, the harms of such vertical integration are either ignored or downplayed; rinse wash and repeat. Of course given that AT&T is on the cusp of successfully killing net neutrality, the end result of this merger could prove extra problematic. AT&T has been given the green light for an ocean of "creative" anti-competitive behaviors that could make life particularly difficult for streaming competitors, whether that comes in the form of zero rating AT&T's own content (while still counting competitor's traffic against AT&T caps), or by simply prioritizing the content of AT&T or its deepest-pocketed allies.
In short, the deal is likely to jack up the costs for competitors (which get passed on to you) at the same time we remove valuable safeguards protecting the health of the internet and the ability to compete on a semi-level playing field. All so a company with a long, long history of behaving badly can have more power over multiple markets. What could possibly go wrong?
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: antitrust, cable, competition, merger, tv
Companies: at&t, cox, dish, time warner
Reader Comments
Subscribe: RSS
View by: Time | Thread
Outside arbitration is a joke
[ link to this | view in chronology ]
Re: Outside arbitration is a joke
They say that mandatory arbitration is good for me, but not for them ... interesting. The rationalizations are humorous.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Consumer advocates
[ link to this | view in chronology ]
Re: Consumer advocates
[ link to this | view in chronology ]
Re: Re: Consumer advocates
[ link to this | view in chronology ]
Re: Re: Re: Consumer advocates
What "bullshit" would that be?
[ link to this | view in chronology ]
Re: Re: Re: Re: Consumer advocates
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Consumer advocates
Heh, in other words, "none". Or maybe you were looking inward.
[ link to this | view in chronology ]
Re: Consumer advocates
[ link to this | view in chronology ]
Re: Consumer advocates
Those on the right (not necessarily correct) side tend to not spend much time evaluating their actions in terms of what impact it may have upon others. They seem more concerned with what impact it may have upon their dividends.
This does not by itself make one "side" better than the other, but it does point out certain common personality traits and to where they gravitate.
[ link to this | view in chronology ]
Re: Consumer advocates
[ link to this | view in chronology ]
Re: Consumer advocates
[ link to this | view in chronology ]
Re: Re: Consumer advocates
Not while on the clock
[ link to this | view in chronology ]
Secondly, it's almost like the cable companies are wishing there was some sort of Network rules that was enforced that they could run. One that could be totally neutral in what content can be run over their networks. It's funny how they are now claiming competition is a GOOD thing when they are facing a market dominance by someone other than themselves.
[ link to this | view in chronology ]
Re:
Great idea!
Let's call it the Federal Communications Commission.
[ link to this | view in chronology ]
Re: Re:
Lets watch them fail to work and ask them to assume more power too in a never ending cycle of incompetence and increased regulatory capture.
Like like the backdoor encryption key that only law enforcement can use debate... you just need to NERD HARDER for it to work!
At some point we need to stop pouring the bullshit on, say its not working and start the fuck over. But no... we can't do that... hard work is for pussies lets put yet another band-aid over it and say we fixed a problem without fixing anything and coming back next cycle and bitching about the same thing a different way!
The FCC is a fucking failure... Abolish it to send a message and create something new instead.
[ link to this | view in chronology ]
Monopolies are...
Two faced anti-competition snobbery from addicted monopolists.
[ link to this | view in chronology ]
Re: Monopolies are...
[ link to this | view in chronology ]
[Definition of two-faced
1 : double-dealing, false
2 : having two faces](https://www.merriam-webster.com/dictionary/two-faced)
vs
[Definition of hypocrisy
plural hypocrisies
1 : a feigning to be what one is not or to believe what one does not : behavior that contradicts what one claims to believe or feel His hypocrisy was finally revealed with the publication of his private letters.; especially : the false assumption of an appearance of virtue or religion our conventional morality often serves as a cover for hypocrisy and selfishness —Lucius Garvin
2 : an act or instance of hypocrisy a keen awareness of one's parents' hypocrisies](https://www.merriam-webster.com/dictionary/hypocrisy)
And the difference is?
(and markdown isn't working in preview?)
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
I assume you were responding to me, you answered your own question with your own comment, but I will break it down.
When you are dealing with medical issues, you will have "symptoms" that present. To make a proper diagnosis of the problem you DONT diagnose the patient with EVERY illness that has a matching symptom and then prescribe drugs for them. That will probably kill your patient.
What you do, is find the one illness that matches ALL symptoms as closely as possible.
There is a lot LESS two-face going on compared to the amount of hypocrisy going on. It like saying the jaywalking, raping, murdering, pedo should get in trouble for jaywalking when the other charges are so much more of a problem than just being two faced.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
I was making an example. This means I used a situation not directly associated with the subject to help explain a "concept".
There are many ways to explain a concept, if my concept was not simple enough for you maybe you can finish grade school and come back and read the post again.
[ link to this | view in chronology ]
Re: Re: Re: Re:
Seems to me that your are an example.
[ link to this | view in chronology ]
Cable Company Opposition
Darn it. And here I thought we could consistently vote for our best interests if we just did what these companies claim would be bad for us.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
i LIKED THE OLD DAYS..
That the Wages for the TOP FEW, were based on Profit NOT debating Contracts, and NO LOSS wages and retirement packages..that were 10+ years EVEN if they got fired..
If the Stock holders got upset(even with no power) about the TOP wages they could DUMP the stocks and hurt the company, because it Affected THE PROFITS.
And when the Company wanted to ADD something it Came from Profits and how much they SAVED over time to do it..
NOW they just force the value of Stock up a few points and people JUMP IN and buy more..and they get the money from UPPING the Price of services/products.. Inflating the Profits, to get Stocks to go up, and just paying the Top wages..
[ link to this | view in chronology ]
from the Synergies,-yo dept
[ link to this | view in chronology ]
Unlike all of our other policies & purchased lawmakers propping up our shitty monopolies to make sure we can screw consumers out of maximum dollars for "service" that 3rd world nations would turn their noses up at.
You all worked so vary hard to capture the market & now are butthurt some of them decided to consolidate more to get a bigger payday. Are we sure this just isn't sour grapes that they didn't think of this first?
If it passes, if it doesn't... there will be no more competition, consumers will get screwed even more as the corporations nickel & dime them to cover the costs of the slap fight, while still paying CEO's huge amounts for not wasting money on improving the offerings.
A pox all all of your houses, you created the situation & for once its nice to see you getting screwed & being upset... until you work out how best to screw consumers to keep raising your bottom lines.
[ link to this | view in chronology ]
Re:
"Terrible For Competition And Consumers"
It's the first half that's got them objecting. The consumers can be drained dry, but when it comes to someone shaking them down due to having a better position, now it's a problem.
Of course the kicker is that while they only care about the first half everything I've heard would indicate that the second half is very much true as well, and as such while their objections may be entirely self-serving they are still valid and something that should be taken seriously.
[ link to this | view in chronology ]
[ link to this | view in chronology ]