AT&T announced its plan (opens in new tab) to acquire Time Warner for $85.4 billion in cash and stock.
Time Warner owns or has a stake in many prominent media companies, including HBO, CNN, and DC Comics, among others. AT&T wants to use these companies alongside its networks--it provides cable TV, broadband, satellite television, and wireless network access to hundreds of millions of people--to "give customers unmatched choice, quality, value and experiences that will define the future of media and communications."
But the merger, which AT&T expects to be approved by shareholders and regulators by the end of 2017, is unlikely to benefit consumers. Deals like this are mostly about consolidating power, not improving products, and this particular deal threatens the freedom of Time Warner's content and the privacy of AT&T's customers.
It's a small miracle that Time Warner Cable was spun off into a separate entity in 2009--at least this way AT&T isn't buying another ISP and worsening America's problem with pseudo-monopolies controlling internet access.
Still, AT&T is doing its best to convince the world that this merger will be good for someone besides itself. Chairman and CEO Randall Stephenson said in a statement (opens in new tab) that the company plans to give Time Warner full autonomy and would offer total editorial independence to CNN's newsroom.
Our intent is to operate Time Warner as it operates today, with autonomy in its divisions, including the world-class creative talent and journalists that make Time Warner a leader in entertainment and news.CNN is an American symbol of independent journalism and First Amendment free speech. My board and I are clear — CNN will remain completely independent from an editorial perspective.
Yet there are sure to be concerns about AT&T meddling with Time Warner's companies. The promise not to interfere with them could be genuine; it could also be something the companies have to say to convince regulators to allow this merger to proceed. If the deal is able to go forward, AT&T could slowly work to ensure that hits like HBO's Game of Thrones are available only to people who subscribe to one of the company's many networks.
There are other potential issues with this merger, too. AT&T said in a press release that buying Time Warner could help both companies boost their ad revenues. This would require them to share and gather more data about their customers, which could in turn erode consumer privacy. AT&T doesn't have the best track record there: The company used to charge its gigabit customers more in exchange for not tracking their online activities for use in targeted advertisements. AT&T said in an email that it stopped that practice in September, but there's still a chance it could do something similar now.
This is especially worrisome given what AT&T said in its announcement about how it could work with Time Warner to better monetize their products:
Customer insights across TV, mobile and broadband will allow [the] new company to: offer more relevant and valuable addressable advertising; innovate with ad-supported content models; better inform content creation; and make OTT and TV Everywhere products smarter and more personalized.
Making its business model even more dependent on advertising will give AT&T more reason to collect data about its users. The two problems could also collide; AT&T's desire to "better inform content creation" using its customer data could easily lead to the company calling the shots at Time Warner based on information collected from AT&T subscribers. The desire to "innovate with ad-supported content models" also doesn't bode well, as those "innovations" can lead to problems like "native advertising" in news sources or obnoxious product placements that detract from TV shows or films.
On the other hand, all of this could turn out fine. Perhaps AT&T will respect the privacy of its customers and stay true to its word not to interfere with Time Warner. However, companies don't often spend $85 billion to acquire another company without plans to use them for something. Time Warner is most useful to AT&T because it offers control over popular content; AT&T is most useful to Time Warner because it has access to data that the media company does not. It would be more surprising for the companies not to act on these strengths than for them to work closely together if the merger is approved.
That's why calls for regulators to oppose the merger have already been made. Former FCC Commissioner Michael Copps, who is now a special adviser to the Common Cause advocacy group, said that the deal will harm consumers.
"Allowing a communications behemoth like AT&T to swallow the Time Warner media empire should be unthinkable," he said in a statement. "The sorry history of mega mergers shows they run roughshod over the public interest. Further entrenching monopoly harms innovation and drives up prices for consumers. The answer is clear: regulators must say no."
That said, they allowed Comcast and NBC Universal to merge so I don't see how they can apply a different standard to ATT and Time Warner.
Everybody, and I mean everybody, knows CNN is liberal Democratic and Fox News is conservative Republican. To know the truth, you need to watch both and the truth is somewhere in the middle.
I thought this too but re-reading the article it mentioned "Time Warner Cable" was split off from "Time Warner" so AT&T is not buying the ISP portion.
So from the ISP viewpoint we are in the same boat as we were. Thought I still feel like there is some monopoly going on here.
Second, Time Warner Cable, which is a separate entity, has already merged into Charter Communications along with Bright House Networks. So that isn't even a valid concern at this point.
You can't be serious. So are you saying let's just not put a stop to all these corporate conglomerate orgy parties going on these days? At what point should we say ENOUGH is ENOUGH? Already most Americans HATE their providers as it is due to mergers and getting too big for their britches with regional monopolies.
Do you honestly think an AT&T-WTC merger would be a positive thing for subscribers? Because if you honestly do and you are an American, then about all I can say is that I hope you do not vote.