Last week, popular cell phone chain, AT&T, announced its intention to buy Time Warner cable company for around $84.5 billion, pending government approval. The merger, if it takes place, will bring together mobile platforms and content in the largest media deal of the year.
Both companies have the potential to gain from the merger. AT&T, which provides internet, wireless, and telecommunication services to customers, has seen losses in both their cellular and video sectors according to the Wall Street Journal. Time Warner, which controls big name networks such as CNN, TNT, HBO and Warner Bros. film and TV studio, is set to be paid $107.50 for each share of stock, according to the CEO of AT&T Randall Stephenson. “It’s a great fit and it creates immediate and long term value for our shareholders ”he said.
The merger might also benefit the average American.” Forbes speculates the merger will improve AT&T offerings and may allow customers to purchase their TV and cellular services jointly in a single package. Subscribers might even be able to watch Time Warner videos without the data counting towards their limits. AT&T, which also owns DirecTV, currently does not count DirecTV app usage.
Yet critics raise concerns. “You have a big distributor owing some of the largest networks” commented Eric Handler, a media analyst. “Is everyone going to have equal access to these networks?” The Washington Post noted with content control, AT&T could be in a position to incentivize customers towards select shows. They could also make it difficult for non AT&T users to get access, resulting in fewer choices for the public.
AT&T is not the only company interested in acquiring content companies. As put by CNN, “It is clear that the future [of media] centers around mobile viewing of TV, movies and other forms of video.”
The deal, if successful, is not expected to take effect until after 2017. The time frame is needed, not only to close the deal, but also to gain approval from government regulators in the justice department. Members of the Senate subcommittee on antitrust have promised to attentively consider the matter. “An acquisition of Time Warner and AT&T would potentially raise significant antitrust issues, which the subcommittee would carefully examine,” stated Senators, Mike Lee and Amy Klobuchar.
Despite the Senate’s assurances, anti-trust experts agree the federal government will most likely approve the merger. Reuters stated the approved transaction between Comcast and NBC Universal in 2011 set a precedent that is hard to ignore. The proposed merger between AT&T and Time Warner is a similar, smaller version of that deal.
Presidential candidate, Donald Trump, has vowed his administration will stop the merger should he be elected. “It’s too much concentration of power in the hands of too few,” he said during a speech on October 22. According to CNN, Trump sees the deal as part of an unjust media system which he said has been biased against his campaign.