Now that AT&T’s plan of an $85 billion acquisition of Time Warner is official, the big question is whether or not it will make it through the review process by US regulators.
Even before it was announced, the two companies faced harsh scepticism that the deal would be approved. Since Saturday night, AT&T CEO Randall Stephenson and Time Warner CEO Jeff Bewkes have been making the case for why they’re confident the deal will go through.
Here are the highlights of their arguments:
On a conference call with reporters Saturday night, Stephenson stressed that the acquisition was a vertical integration, meaning AT&T and Time Warner don’t currently compete and therefore the acquisition won’t be taking a competitor out of the market.
He argued that this is much different than AT&T’s attempted takeover of T-Mobile in 2011. That deal was shot down by regulators. It’s more similar to Comcast’s takeover of NBC Universal.
Recent concerns with similar mergers
Despite Stephenson and Bewkes’ argument that this deal wouldn’t eliminate competition from the market, there have been signs that regulators aren’t a fan of vertical deals like this.
But Stephenson said he thinks any concerns could be put to rest by offering concessions like Comcast did with NBC.
“While regulators will often times have concerns with vertical integrations, those are always remedied by conditions imposed on the merger,” Stephenson said on an interview with CNBC Monday morning. “And so that’s how we envision this one to play out.”
We won’t learn what those concessions are until AT&T starts moving forward with the regulatory review.
Good for Consumers
As viewing habits shift from traditional linear TV to mobile and over-the-top internet services, AT&T thinks this will be a win for customers. The company says it will make it easier to get the content they like from HBO, CNN, TNT, and others on more devices.
For example, AT&T, through its acquisition of DirecTV last year, will launch a new streaming service in November called DirecTV Now, which will let you watch pay TV over the internet on any device. Owning a lot of that content through Time Warner makes services like that even easier to build.
The argument against the merger
Rich Greenfield, an analyst at research firm BTIG, has been one of the most vocal pundits against the AT&T/Time Warner deal. He said AT&T could raise the price of Time Warner content, which is harmful to consumers who don’t have AT&T. It gives AT&T an unfair advantage and costs most consumers in the long run.
“Let’s be honest, prices aren’t going to go down because of this,” Greenfield told the New York Times on Sunday.