Senate Democrats are calling on the Justice Department to closely scrutinize AT&T’s proposed $85 billion acquisition of Time Warner, and if substantial harms are apparent, reject the deal.
In a letter signed by Senators Al Franken, Elizabeth Warren, Edward Markey, Ron Wyden, Jeffrey Merkley, Richard Blumenthal, Bernie Sanders, Maria Cantwell, Sherrod Brown, Tammy Baldwin and Cory Booker, the lawmakers contend that a combined AT&T and Time Warner will have “unmatched control of popular content” which could lead to higher prices, fewer choices and poorer quality services for Americans.
“Before initiating the next big wave of media consolidation, you must consider how the $85 billion deal will impact Americans' wallets, as well as their access to a wide-range of news and entertainment programming. Should you determine that the substantial harms to competition and consumers arising from the transaction outweigh the purported benefits, you should reject the proposed acquisition,” the senators wrote.
Specifically, the senators said the deal will substantially lessen competition and that behavioral conditions are insufficient in addressing potential harms brought on by the deal. They allege that AT&T raised prices for DirecTV after acquiring the satellite provider in 2015. AT&T promised to keep programming costs in check but cited rising programming costs as the reason for the price hike, according to the senators.
The senators also question the DOJ’s ability to enforce any conditions placed on the merger without assistance from the FCC, which will not review the merger. In particular, the letter calls out AT&T and Time Warner’s claims that the merger would strengthen their incentives to invest in wireless broadband networks.
“It is unclear, however, how this benefit would counteract the harms to competition created by this deal, and how the DOJ would hold a communications provider accountable for such a commitment should the Department make it legally binding. Therefore, we question whether it is appropriate for the Antitrust Division to consider these stated benefits of the deal—and whether they outweigh the substantial harms—if there is no way to ensure that the combined company actually acts to achieve such benefits,” the senators wrote.
Earlier this year, AT&T and Time Warner responded to concerns raised by Democratic lawmakers by offering up a list of potential benefits the merger could have for the video industry, both for programmers and service providers.
“AT&T and Time Warner have both encountered such friction as they have sought to bring innovations to market. That friction has kept consumers from getting the full suite of innovative features that they want,” the companies wrote.
Specific video-related innovations that AT&T and Time Warner see possible post-merger include:
- Short-form programming optimized for presentation on mobile devices
- Interactive and personalized methods of viewing sports and other live events
- More relevant advertising in ad-supported video services
- Integrations of professionally produced content with virtual reality or augmented reality services
- Services that encourage consumers to combine professionally produced content with their own creative content and share the results on social media
- Greater choice, convenience and value in programming bundles