Innovation or monopoly? AT&T, Time Warner CEOs defend deal
WASHINGTON (AP) - The CEOs of AT&T and Time Warner told Congress that the merger of the two media and communications giants will benefit Americans and boost competition in cable, rather than quash it.
The skeptical head of the Senate antitrust panel examining the proposed $85.4 billion deal says the tie-up could restrain competition.
The panel's chairman, Sen. Michael Lee, R-Utah, and its senior Democrat have said the deal, one of the biggest media mergers ever, raises significant antitrust issues.
Lee opened the hearing Wednesday by saying, "The potential anticompetitive favoritism that the combined firm could bestow on its own products is not limited to price or access, but extends to the quality of the offerings as well."
AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes, however, sitting before the Senate Judiciary antitrust subcommittee, said the combined company would push technology forward and lead to more choices for customers.
"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models, giving customers more options, creating more competition for cable TV providers and accelerating deployment of 5G wireless broadband," Stephenson said Wednesday in prepared testimony.
Critics of the deal range from industry analysts and public-interest groups to President-elect Donald Trump, who promised on the campaign trail that he'd kill the deal "because it's too much concentration of power in the hands of too few."
Stephenson said Tuesday that he is confident the deal will be approved despite vocal opposition from Trump.
The deal must win approval from federal regulators. It would bind the second-largest U.S. telecommunications company with a media and entertainment conglomerate that owns CNN, HBO, the "Harry Potter" franchise and pro basketball. It's a big-time bet on a partnership between a company that distributes information and entertainment to consumers, and one that produces it.
The Justice Department, and possibly the Federal Communications Commission under the incoming Trump administration, will put the proposed deal under scrutiny. Even assuming the merger is approved, some experts believe the regulators might saddle the combined company with so many conditions that the deal would no longer make sense.
The Senate subcommittee doesn't possess the authority to rule on the merger, but members are likely to use their platform to question why the companies would not share Time Warner content with other cable companies or online video providers, among other things.
Time Warner makes TV shows and movies, while AT&T gets that video to customers' computers, phones and TVs. The concern is that AT&T might try to make its broadband service stand out by tying it to Time Warner's programs and films.
That, critics say, could limit consumer choice.
Because of Time Warner's shows and movies - including "Game of Thrones" and the "Harry Potter" films - and AT&T's ability to gather information about its tens of millions of customers, AT&T thinks it could do a better job tailoring ads and video to user preferences. It could then create more attractive subscription packages suited for phones, where people are increasingly watching video.
But many consumers already consider ads that know everything about them creepy or invasive, and digital-rights groups complain that any preferential deal AT&T could offer with, say, HBO, would hurt competition.
Billionaire sports and media mogul Mark Cuban, owner of the NBA's Dallas Mavericks, joined the CEOs at Wednesday's hearing. He says the merger would enhance competition.
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AP Technology Writer Tali Arbel in New York contributed to this report.