Greg Sandoval/Business Insider

• The pay-TV sector is fraught with danger for traditional cable companies, or at least that's how AT&T CEO Randall Stephenson described the situation at the Code conference on Wednesday. 

• It's true that YouTube TV,  Netflix and other internet players are starting to cut into their market share but is that enough of a reason for the government to okay AT&T's proposed merger with Time Warner?

• Some analysts believe that it might be harder for AT&T, Comcast and the other cable guys to compete against the Internet players than they realize. 

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Poor AT&T.

The way CEO Randall Stephenson describes the competitive environment in the pay-TV sector, one might think his company, the world's largest telecommunications company, is an underdog.

On stage at the Code Conference at Rancho Palos Verdes, Calif. on Wednesday, Stephenson bemoaned the massive forces lined up against his company — as well as against  Comcast, and Verizon — as omnipotent internet players move into their turf.

"You're going to have a hard time competing with these guys," Stephenson said, describing the challenge facing companies like AT&T. "The FANG market caps (Facebook, Amazon, Netflix and Google) have gone up $1 trillion dollars. You better figure out how to vertically compete."

Not surprisingly, this is the same argument that AT&T's lawyers have made to regulators who are trying to block AT&T's proposed $85.4 billion acquisition of Time Warner, parent company of CNN and HBO. 

AT&T, Comcast and traditional cable providers face more competition from the likes of Google's YouTube and Netflix. They are looking for ways to adapt to the new competitive pressures. The tech guys have cut into their market share by supplying consumers with alternatives to traditional video entertainment.

The cable and telco companies are eyeing film and TV companies as the solution to the problem and almost instinctively moving to acquire these media assets to fight the internet threat. But it's not clear that that's the right answer. 

As Peter Kafka, the Recode Senior Editor interviewing Stephenson, pointed out, many of these media conglomerates have seen their revenues decline for quite some time now. Media tycoon Rupert Murdoch is selling a large chunk of his empire, including the Hollywood film studio 21st Century Fox.

At at time when more experienced media players are getting out of the business, why does Stephenson think he can make it work for him?