AT&T Breaks Another Merger Promise In Making 'Friends' Exclusive

from the who-could-have-predicted-it dept

Last year AT&T defeated the DOJ’s challenge to the company’s $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his original 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality and neutered FCC oversight to dominate smaller competitors and tilt the entire internet ecosystem in its favor.

While the DOJ lost its original case, it was quick to appeal late last year, highlighting how within weeks of the deal AT&T had jacked up prices on consumers and competitors like Dish Network, which says it was forced to pull HBO from its lineup because it could no longer afford the higher rates.

Critics of the merger had also pointed out how AT&T would likely use the deal to increasingly make content exclusive to its own service, making it harder for competitors to access it. If you’ll recall, this was something AT&T CEO Randall Stephenson also insisted wouldn’t happen when addressing a Senate antitrust subcommittee pre-merger:

“Nor is there any reason to believe we could use Time Warner programming or AT&T networks to hurt related markets. Simply put, it would be irrational business behavior to do so. Time Warner’s programming is more valuable when distributed to as many eyes as possible. Moreover, in order to have great programming, it is imperative that we attract great creative talent to develop it. The best way to attract that talent is through widespread distribution of Time Warner content.”

Of course this week AT&T announced it would be taking content like Friends and making it exclusive to its own streaming platforms, including its new looming HBO Max service:

“AT&T will start restricting some Time Warner shows to its own streaming service, despite previously telling the government that it would distribute Time Warner content as widely as possible.

WarnerMedia, the division AT&T created when it bought Time Warner, today announced a new online streaming service called “HBO Max.” HBO Max will debut in the spring of 2020 and include exclusives that will no longer be available on other streaming platforms.”

On its surface this doesn’t seem like that big of a deal. After all, Friends is an old show, and most users probably won’t care. And it’s certainly not the only show getting this treatment (Comcast NBC Universal just made The Office exclusive to its streaming platform, and Disney is also pulling Netflix content for exclusive use on its own looming Disney+ service). But more broadly, the more essential content AT&T makes exclusive to its own platform (especially and likely inevitably, HBO), the more difficult it will be to compete with AT&T. Knowing AT&T, there’s going to be far more exclusives where this came from.

This is all before you even get to net neutrality and AT&T’s domination in broadband, which has allowed it to behave anti-competitively in different, even more problematic ways (like only imposing arbitrary usage caps if you use a competitor’s service). Letting companies like Comcast NBC Universal and AT&T Time Warner dominate both the conduit and the content will ultimately result in a universe of headaches for competitors and consumers alike. And Judge Leon’s failure to see (or acknowledge) this will be a “gift” that keeps on giving for the next decade.

The other major problem these ongoing exclusives have is they increasingly force consumers to hunt and peck through a growing, cumbersome list of subscription services just to find the content they’re looking for. And if subscription price and ease of use isn’t managed carefully, it’s simply going to drive frustrated users back to piracy. And when that happens, history suggests these companies will blame everybody and everything (ban VPNS!) but themselves for it.

All of that said, I’m not sure banning exclusive content deals is the answer. What would be at least part the answer for maintaining healthier markets? Finally realizing that endless media consolidation and mindless mega-mergers are generally harmful to the media and telecom sector (as now AT&T owned HBO and DC comics employees are just starting to figure out post merger). And that the long list of promises made in the ramp up to such super unions are almost always uniformly empty. There are fifty years of data for clear supporting evidence, especially in telecom.

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Companies: at&t, hbo, netflix, time warner

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Comments on “AT&T Breaks Another Merger Promise In Making 'Friends' Exclusive”

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Rocky says:

Re: English

Well, I think I prefer someone who make an occasional mistake now and then before someone who just says "that’s wrong" before they bugger off without explaining the error.

If you instead had made a comment about the particular text that you didn’t understand and asked about clarification or made a suggestion on how to better put it into words you wouldn’t come across as a wise-ass.

PaulT (profile) says:

"On its surface this doesn’t seem like that big of a deal. After all, Friends is an old show, and most users probably won’t care. And it’s certainly not the only show getting this treatment (Comcast NBC Universal just made The Office exclusive to its streaming platform"

Well, until you look at facts and realise that these 2 old shows were the most watched on Netflix.

Anonymous Coward says:

Re: Re: Re: Re:

If Netflix were on our side, that would be a great example of why we need to expand rights like First Sale and Fair Use to digital works. But they’re a film studio now, even an MPAA member, and are such a purveyor of DRM (and supporter of "EME" web DRM) that they’d rather remove a film than provide it DRM-free at the request of the filmmaker.

John85851 (profile) says:

The goose that laid the golden egg

This is yet another case of the goose that laid the golden egg.
Netflix paid Warner $100 million to stream "Friends" for another year. That’s a lot of money for an older show!
But the Warner executives looked at that said "well if we can get $100 million from Netflix for just ‘Friends’, imagine how much money we could make if we kept it on our own service". Yet part of what made "Friends" worth is so much is because so many people 1) have Netflix and 2) use Netflix to watch it.
Sorry, but I doubt a fraction of the Netflix audience will subscribe to Warner’s service just to see "Friends". So now Warner loses $100 million and they don’t get the subscriber base they’re looking for.
Great plan!

Anonymous Coward says:

This is why the proliferation of streaming services is good. It may be a bit painful as Netflix and Amazon Prime no longer have as wide a range of programming, but eventually it will consolidate back down to a reasonable number of services.

Where Karl and Mike are absolutely correct are that exclusive are detrimental not only to streaming customers, but also to the companies. But that’s going to be a hard nut to crack. Can you imagine Netflix being willing to distribute Stranger Things on Amazon Prime?

Anonymous Coward says:

Re: Re: Re:

Well, they won’t be the "only" shows available, but they will be the only show available at a reasonable cost…

When every Broadcaster/Telecom/Monopoly has their own streaming service, with their own exclusive content, which is only available free to watch over their owned ISP’s… the consumers will have SO many options, amirite?

I mean we will already be paying $100 for the ISP connection, $200 for the Mobile, connection, how many people are going to add on another $15 a month to watch 2 shows (that will also cost another $5 worth of data on the download cap, since they are non-isp content)… what could go wrong, I mean what consumer doesn’t want to do this and keep forking out another $20-30 a month to watch other shows?

At some point the house of cards will crumble, the public will ignore Imaginary Property rights and take what they own (I’ve bought most of my music collection 4 times over, so why shouldn’t I be justified in downloading lossless copies of everything to prevent future ‘format shifting money grabs’?)

Would anyone feel any "moral" qualms about downloading something you have legally purchased in 4 different formats over your lifetime (LP, 8Track, Cassette, CD… I’m downloading the song and keeping it forever as a digital file (until they start reaching into PC’s and ‘taking back’ what they think they own)…I’ve paid enough for the same content while making the corporations very rich – with very little of the format shifting revenue going to the artists)? So explain to me WHY I SHOULD PAY AGAIN FOR SOMETHING I ALREADY own 4 times over?

trollificus (profile) says:

Re: Re: Re: Re:Golden Geese

That’s a good statement of the ethical case against the way copyright is being abused here. On the social side, I would propose that another consequence, besides piracy (which people correctly point out will only generate efforts at tighter and more comprehensive control of the Internet), could be…not consuming electronic media from such sources at all!

There are such things as books, doing real things in the real world, and interacting with actual people; even if they are not as charming as Jim Halper or appealing as Pam Beasley. There are also musical instruments to be abused and singing, using the (still freely avaialble) air around you. At some point, when people have been driven to such desperate measures while still having money in their pockets, our corporate overlords may realize there’s only so many golden eggs they can beat from the dead horse of IP monetization.

It may be painful, but when you’re paying $400-600/month for "content" and access to it already, can you blame them when they go fishing for another few hundreds/month?

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