Now that AT&T has reached a deal to acquire Time Warner, consumers could soon be getting both their cell phone service and the next installment of “Game of Thrones” from the same gigantic company.
AT&T called the deal “a perfect match of two companies with complementary strengths” when it announced the deal Saturday, but consumer groups are expressing concern, saying the new media colossus could limit consumer choice and spur more industry consolidation. The combined entity, with both distribution and content, would be one of the most powerful media companies in the world.
“The argument that ‘bigger is better’ rarely rings true for consumers," said Laura MacCleery, vice president of policy and mobilization for Consumer Reports. "If AT&T gains control over all of this premium content, it's difficult to see how that leads to more competition and choice for consumers."
The deal, valued at just over $85 billion, brings together two companies that already cast big shadows. AT&T is the country’s second-largest cell-phone service provider, and with DirecTV it's the number one pay TV company in the United States. A streaming DirecTV service, called DirecTV Now, is slated to launch by the end of the year.
Time Warner—which split from the Time Warner Cable in 2009—is home to HBO, Warner Bros. film studios, CNN, TBS, and TNT. It also owns DC Entertainment, where both Batman and Superman hang their capes, and it has a 10 percent stake in the Hulu streaming subscription service. It offers HBO Now, a monthly paid streaming service that doesn’t require you to be a pay-TV subscriber.
What Consumers Should Watch For
The new AT&T deal comes during a period of consolidation. Viacom and CBS reportedly are considering a deal. Before agreeing to be acquired by AT&T, Time Warner reportedly was talking about a possible tie-up with Apple. Analysts have speculated about an potential Disney-Netflix merger. Verizon is in the process of acquiring Yahoo's core businesses after purchasing AOL earlier, and Comcast added to its content portfolio by buying DreamWorks Animation.
Minnesota Senator Al Franken issued a statement expressing concerns about the consolidation. “AT&T’s reported proposal to acquire Time Warner for more than $80 billion raises some immediate flags about consolidation in the media market," Franken said. "I’m skeptical of huge media mergers because they can lead to higher costs, fewer choices, and even worse service for consumers.”
A question for consumers is whether AT&T will try and leverage its new assets to put non-AT&T customers at a disadvantage, making it either harder or more expensive for them to get access to Time Warner shows, or making some programs exclusive to AT&T wireless customers.