October 31, 2016

AT&T-Time Warner Proposed Merger Earns Nearly Universal Panning

Comcast's purchase of NBCUniversal is a cautionary tale for consumers when it comes to media monopolies, says Professor Victor Pickard
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Victor Willoughby Pickard is an Associate Professor at the University of Pennsylvania's Annenberg School for Communication where he studies the history and political economy of media. He is the author of America's Battle for Media Democracy: The Triumph of Corporate Libertarianism and the Future of Media Reform, and the co-editor, with Robert McChesney, of Will the Last Reporter Please Turn Out the Lights. You can follow him on twitter @vwpickard.


AT&T-Time Warner Proposed Merger Earns Nearly Universal PanningKIM BROWN, TRNN: Welcome to the Real News Network. I’m Kim Brown in Baltimore.

Now what issue could possibly unite the likes of Donald Trump, Bernie Sanders, Elizabeth Warren and possibly Hillary Clinton? The proposed mega merger of communications giant AT&T and the content juggernaut Time Warner has many in and outside of Washington raising skeptical eyebrows about what this merger could possibly mean for competition, anti-trust issues and the impact on consumers.

Joining us on this morning or this afternoon to discuss this is Victor Pickard. He is an Associate Professor at the University of Pennsylvania's Annenberg School for Communication where he studies the history and political economy of media. He is also the author of America’s Battle for Media Democracy: The Triumph of Corporate Libertarianism and the Future of Media Reform. He’s also along with co-editor, Robert McChesney, of Will the Last Reporter Please Turn Out the Lights.

Professor thank you so much for speaking with us.

VICTOR PICKARD: Thanks for having me.

BROWN: AT&T has offered upwards of 80 billion dollars for Time Warner which is the 3rd largest media conglomerate behind Comcast and Disney. Time Warner owns a variety of content properties such as HBO, Turner Sports, CNN, and a whole lot more. Now the buzzwords synergy and convergence have been mentioned quite a bit in relation to this deal. So what’s in it for AT&T to be in the Time Warner business?

PICKARD: AT&T has a lot to gain from this. Being already the largest [PTV] operator, it’s the second largest wireless data provider and it’s the 3rd largest broadband provider in the United States. But that means it owns the pipes. It doesn’t own a lot of the content that flows through those pipes. So increasingly the likes of AT&T, it makes business sense although it might not be good for the rest of us, it would be good for AT&T hypothetically to also control the content, the information, the entertainment media that typically flows through those channels.

BROWN: So, some market analysts are already [preparing] the deal pretty early on saying that AT&T is overpaying for Time Warner. That it is overselling the synergies that it’s touting and also saying that the deal might be a moot point anyways because it won’t get approval from government regulators. What are your thoughts about that?

PICKARD: Well that’s what everyone’s trying to speculate on now at the moment about whether this will pass regulatory muster. A lot of factors are in play here. A lot of things that we can’t predict at this moment. But it’s definitely true that even though this deal reflected high degree of confidence, certainly AT&T would not have gone this far without thinking that they had a very good shot of having it approved but almost immediately as you noted earlier there was almost a universal condemnation of this deal and I think a lot of people as each day goes by, there’s more and more skepticism about how this could affect consumers and I think these are very legitimate concerns. There’s going to be a lot of scrutiny of this deal in the months ahead.

BROWN: So how would consumers potentially be impacted should this deal go through and eventually get approved?

PICKARD: Well they will likely be impacted on a daily basis, at least for tens of millions of Americans who for example watch HBO programming. The fact that as you noted earlier, that AT&T had to raise tremendous capital to be able to afford this deal and is going into debt by billions and billions of dollars. That means in one way or another, consumers are probably going to have to pay more for their monthly services. In many ways, the costs of this deal will be put onto consumers, will be passed onto them in various ways. You might see AT&T charging its competitors more for its programming and in turn its competitors, Comcast for example will turn around and force its customers for its programming. So, in one way or another, consumers will likely have to foot the bill.

BROWN: You know both of these companies are pretty interesting in their own right because they have historical roots here in the US as both communications and entertainment companies as well and both have stories of being broken up, bought and sold, and in AT&T’s case a reunification of sorts.

PICKARD: That’s right. Historically it seems that AT&T has always had these monopolistic tendencies. If you think of the days Ma Bell. But I also think that this shows that historically Americans have understood that there are specific problems, potential hazards with this kind of merger. It’s referred to as vertical integration when one company owns various stages of distribution and content creation, it creates unique vulnerabilities for you might say mischief where the company that owns the pipes will try to charge more and privilege its own programming in one way or another. That’s why we’ve always been concerned with these kinds of vertical mergers. Though paradoxically in recent years, they have often gone through and I think that again that’s one of the reasons why AT&T thought that this would pass regulatory review.

BROWN: So you talk about how some of these mergers have gone through in the not so distant past and one that comes to mind is that of Comcast and NBC Universal. A few years between now and when that initial merger happened, how has that one faired in retrospect?

PICKARD: Well it did go through as you know. You’re absolutely right, it’s the one that invoked most often now as a kind of an antecedent. But really in many ways despite it being a kind of precedent for what we’re seeing today, many of the promises that you heard at that time that it would lead to more affordable services, that Comcast agreed to a number of merger conditions. It was supposed to provide affordable broadband to low income communities. Many of these promises did not pay out as they were supposed to and I think it’s become a kind of cautionary tale. Many people are pointing to that merger and saying it did not benefit consumers then and this merger likely will also not benefit consumers.

You know politicians have been weighing in on this potential merger. GOP presidential nominee Donald Trump has decried the deal saying that it will “destroy democracy”. Democratic presidential nominee Hillary Clinton says if elected she will have her administration examine this pretty closely. Vermont senator and former nominee or former candidate for the democratic nomination Bernie Sanders, he says the deal should be killed and Massachusetts senator Elizabeth Warren told Fortune Magazine that she objects to the deal because of a former Department of Justice antitrust regulator Kristine Varney is now in the private sector who’s lobbying very hard for this deal to go through. Now politics makes strange bedfellows indeed professor. Did we ever think that we’d see Donald Trump, Hillary Clinton, Bernie Sanders, and Liz Warren all agreeing on the same issue?

PICKARD: It’s a rare moment of consensus but I think it speaks to the gravity of this issue. As you know these external politics play a major role in weather this merger will go through and there will be, regardless of who is elected president, there will be congressional bipartisan hearings around this. But ultimately it’s going to be decided at the Justice Department, possibly the federal communications commission as well. That again, that will be determined in part by whose elected president because the president will appoint people at the Justice Department and the FCC who in turn will be making these kinds of decisions.

But as we’re talking about this, with each day I think we are seeing a shift in the political landscape and I think in general Americans are becoming very frustrated with living under these monopolies and oligopolies. So, I think with time I think you might see this very strange ideological anti-monopoly movement emerge.

BROWN: Indeed we’ve been speaking with Victor Pickard. He’s an Associate Professor at the University of Pennsylvania's Annenberg School for Communications where he studies the history and political economy of media. Professor Pickard we appreciate your time today. Thank you.

PICKARD: Thank you. It’s been my pleasure.

BROWN: And thank you for watching the Real News Network.


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