- AT&T wants to buy Time Warner for $US85 billion.
AT&T’s past moves have shown that it will likely use its control over Time Warner’s shows and movies to thwart rivals and charge customers more.
- The company could limit access to Time Warner’s content to its own subscribers or make that content cheaper or easier for its subscribers to watch.
If you want to understand how AT&T’s proposed $US85 billion purchase of Time Warner might affect you, you only have to be a Taylor Swift fan.
Swift, as you likely know, just released a new album this month. Along with “Reputation,” Swift released some videos and behind-the-scenes clips that were tied to it. But if you wanted to watch them, you had to be a subscriber to AT&T or DirecTV, the company’s pay TV service. Thanks to an exclusive deal AT&T had signed, everyone else was out of luck.
The situation may not seem like a big deal — especially if you’re not a Swiftie. And to be clear, the exclusive arrangement between AT&T and Swift isn’t related to the potential mega-merger.
But the arrangement offers a sense of how AT&T thinks about creative content. The company sees videos, TV shows, and movies as tools it can use to capture and keep customers — and squeeze as much money as possible out of them.
That’s worrisome, because if the AT&T-Time Warner deal gets approved by regulators, it won’t just be Tay Tay’s videos that the combined company will control. It will also rule over a vast collection of video and other popular entertainment, ranging from HBO’s “Game of Thrones” to the rights to NBA games on TNT. And it’s almost certain to use its control over that content to its benefit.
AT&T’s is trying to buy Time Warner so it can make more money off its current customers and attract new ones from rivals, said Matt Wood, the policy director at Free Press, a consumer advocacy group.
“When AT&T buys a lot of content, they use that content as a sword,” Wood said.
AT&T did not respond to a request for comment.
As part of its strategy, the newly enlarged AT&T may in some cases limit some of its new videos and movies and other Time Warner content to its own subscribers. For example, it could potentially create new “Harry Potter” videos or shows involving characters from the DC comics universe and only allow its customers to watch them. If you were a customer of Verizon or some other service, you would be out of luck.
But more frequently, it may try to ensure that its subscribers get the best experience with its movies, shows, and services. At the same time, it may also try to make sure that when consumers try to access its content through other companies’ services, the experience is less than ideal.
We’ve already seen a hint at that this year when AT&T started offering HBO’s streaming service for free with some of its unlimited wireless plans. You can still watch HBO if you have Verizon or T-Mobile, of course, but you won’t be getting it for free.
If AT&T continues the promotion after it owns HBO, it will give the telecom giant an unfair advantage over its rivals. To do the same thing for their customers, they’d have to pay AT&T — assuming AT&T would even allow them to do that.
And AT&T could do other things to give itself a leg up. It could make the experience of watching its rivals shows or accessing their services a worse experience than watching or accessing its own. Potentially, AT&T could make it harder for its customers to tune in Fox than CNN or the Disney Channel than TBS.
Similar concerns were voiced at the beginning of this decade when Comcast was trying to buy NBC Universal. Just like we’re seeing today, a cable and internet provider was attempting to snap up a company that controlled massive amounts of content. Michael Copps, then a commissioner with the Federal Communications Commission, which had oversight over the merger, worried at the time that the tie-up would put too much power into the hands of one giant corporation.
In particular, Copps was worried about the effect the deal would have on Time Warner’s newsrooms and news gathering.
“I had seen merger after merger come along where the costs were in the billions of dollars,” said Copps, who ended up being the only one of the FCC’s five commissioners who voted against the deal. “A lot of these big companies turn to newsrooms as a way to cut costs.”
He continued: “It’s dumbed down our democratic dialogue.”
By merging with Time-Warner, AT&T would be in a similar position to dominate the way we get information and entertainment, with similar potential consequences. Indeed, it may be in a better position than Comcast was.
AT&T is developing an advanced mobile broadband service known as 5G that could one day replace the wired internet service you use today, which may well come from Comcast. And unlike Comcast, which only offers its traditional cable TV service in areas where it has coaxial cable lines, AT&T offers its competing DirecTV Now service to basically everyone in the US who has a broadband connection.
Allowing AT&T to gobble up Time Warner would put a company that already has a good deal of control over how we access media — and likely will soon have more — in charge of much of the media we access. For AT&T customers, that will likely mean paying more down the road. For other consumers, it could also mean missing out on “Game of Thrones” or the next superhero show.
Either way, you won’t see many benefits. But AT&T sure will.
This column does not necessarily reflect the opinion of Business Insider.