AT&T-Time Warner Deal Latest in Trend Toward Titanic Media Companies

Another controversial telecom megadeal was announced over the weekend as AT&T disclosed plans to acquire Time Warner for a steep price tag north of $85 billion.

But the union – which continues a trend of big telecommunications companies attempting to regain the digital hegemony they held in the early days of the internet – is likely to face steep regulatory roadblocks and has already united the campaigns of Democratic nominee Hillary Clinton and GOP candidate Donald Trump in opposition.

AT&T made the announcement Saturday that it had agreed to pay $107.50 per share to acquire Time Warner, which at the time meant an $85.4 billion deal. The move would put the ownership of HBO, CNN, DirecTV and Warner Bros. under the same corporate umbrella.

"This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers," AT&T Chairman and CEO Randall Stephenson said in a statement over the weekend. "It's an integrated approach, and we believe it's the model that wins over time."

But critics aren't so sure. In a statement circulated Monday, Victor Pickard, an associate professor at the University of Pennsylvania, declared in a statement that the merger would "create a media behemoth with dangerous concentrations of political and economic power" and that "this vertical integration poses significant potential hazards for millions of consumers and could harm the health of our democratic discourse."

"The idea that one company could control so much of our media system, ... [AT&T] is already the leading pay-TV operator in the U.S., and they are already the second-largest data provider and third-largest broadband provider," Pickard tells U.S. News. "And then to acquire this huge media production company puts a lot of power into the hands of one corporate entity."

Pickard notes that the "obvious concern" in a deal this size is that "in one way or another it would raise costs" for consumers. But others have raised concerns that such a large and integrated entity would have an inappropriate amount of control over programming and information streams.

But Pickard says massive mergers like these – particularly involving high-profile telecommunication companies – "appear to be a trend." He cites the multibillion-dollar Comcast-NBCUniversal merger, which was finalized in 2013 and whose assets have since expanded to include DreamWorks Animation and investments in media outlets like Buzzfeed and Vox.

He also highlights Verizon's planned acquisition of Yahoo – a deal valued at nearly $5 billion which has yet to pass regulatory scrutiny. Verizon last year also acquired former internet darling AOL for a similar fee, snatching up a company that had previously merged with Time Warner in what has been described as one of the worst unions in recent corporate history.

"[I]t's not surprising to me that we are again seeing attempts to marry communications and content. I just hope the merged company will have the kind of culture that will enable it to drive synergies and create value," Steve Case, who served as CEO of AOL ahead of its union with Time Warner, told Recode on Sunday. "[T]he idea of the AOL/Time Warner merger made sense, both strategically and, at least for AOL, financially. What was flawed was the execution."

But whether AT&T and Time Warner can effectively execute the deal may not matter if some of the country's most prominent politicians have their way. Trump in a speech Saturday from Gettysburg, Pennsylvania, said his administration would not approve the union "because it's too much concentration of power in the hands of too few."

Peter Navarro, a senior economic adviser to the Trump campaign, said in a statement Sunday that Trump would "break up the new media conglomerate oligopolies that have gained enormous control over our information," should the GOP candidate emerge victorious on Election Day.

Sen. Tim Kaine of Virginia, the Democratic vice presidential nominee, said Sunday on NBC's "Meet the Press" that he "shares those concerns" and that "pro-competition and less concentration is generally helpful, especially in the media."

"There's always this facade of diversity whenever we think about our digital media landscape. What's clearly happening is we're seeing a renewed trend toward concentration," Pickard says, noting the "swift condemnation of this proposed deal" that has extended across the political spectrum. "It seems there are growing antitrust concerns and political pressures that are beginning to organize."

Pressure from rapidly expanding outfits like Google and Facebook likely played a part in this latest AT&T proposal and the Verizon-Yahoo deal, Pickard says. But competition between AT&T and Verizon themselves are also thought to be a factor.

"Once you have one of these megamergers, it puts pressure on other companies to do the same. There's a legitimate concern that this could contribute to a growing wave of these types of mergers," he says. "That's why this particular deal could be a test case as to whether we'll continue to see this or whether we'll turn this back."

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