Deals

by Karl Bode


Filed Under:
antitrust, cable, competition, merger, tv

Companies:
at&t, cox, dish, time warner



Cable Companies Warn In Court That AT&T Time Warner Merger Will Be Absolutely Terrible For Competition And Consumers

from the Synergies,-yo dept

AT&T and the Department of Justice are ramping up their legal arguments in court as the DOJ tries to block the company's $86 billion acquisition of Time Warner. While some question the DOJ's real motives in the case (Trump ally Rupert Murdoch has been lobbying against the deal for competitive reasons for a year), consumer advocates agree that the deal will be horrible for consumers and competitors alike. AT&T already has a long, epic history of anti-consumer behavior, and critics charge the greater leverage will only let AT&T jack up licensing costs for competitors trying to compete with AT&T's own streaming services.

To glean support for its unpopular merger, AT&T offered a special deal to 1,000 of its competitors. According to AT&T's proposal, if competitors agreed to support the merger, the company promised send any price disputes with other cable companies to an outside arbitration process. Most competitors were pretty clearly not impressed:

"But thus far, only 2 percent of AT&T's rivals have expressed support for that plan, according to lawyers for both sides. The revelation came as AT&T and the Department of Justice faced off in court Tuesday, the second day of a trial whose consequences will reverberate across the economy. Of the 1,000 letters sent by AT&T to competing TV providers in November notifying them of the proposal, just 20 received a positive response, according to company and government lawyers."

Many of those same competitors have been called to testify against the merger on behalf of the DOJ, and their comments this week were not what you'd call positive. Dish and its subsidiary Sling TV, for example, were quick to argue that AT&T simply has no incentive to offer reasonable licensing terms to streaming competitors like Sling once the deal's done:

If the merger goes through, Time Warner’s incentives change, according to Schlichting. It could demand higher rates or onerous terms, such as requiring Sling to buy more channels, and would be less likely to compromise, he said. Either Dish’s costs would go up, or if there’s no agreement and Turner channels “go dark,” the company would lose subscribers who would likely switch to DirecTV or its DirecTV Now online service, Schlichting argued. Gaining subscribers would be more lucrative for AT&T than programming fees, he said.

“I just don’t see them having any motivation to move” to get to a deal, he said of Time Warner.

Cable competitor Cox Communications had similar words of warning, noting that AT&T's promise for outside arbitration was a "little bit of gamesmanship," and that losing access to needed content soon to be owned by AT&T could "significantly impact the viability of our business model." DOJ lawyers have warned that if the AT&T Time Warner deal is allowed to proceed, consumer bills could skyrocket to the tune of $436 million annually. Tim Wu, the Columbia law professor who coined the term net neutrality, put things rather succinctly in a New York Times piece this week:

"The (DOJ $436 estimate underestimates) the full costs of this merger to the American public. What we really have here is a brazen effort to prolong the life of a dying business model — “full-service” pay TV — by making “cord-cutting” more expensive, and thereby strangling a revolution in internet television that remains in its toddlerhood. Even worse, greenlighting the deal could set off a domino effect."

While some of these potential pitfalls can be stymied by conditions, meaningful conditions haven't been a strong suit for either party of U.S. governance. More often than not, the companies merging volunteer their own conditions routinely made up of "goals" they would have accomplished anyway. While politicians pretend to be holding these companies' feet to the fire for political brownie points, enforcement is routinely non-existent. As a result, merged companies (especially in the traditionally regulatory capture protected cable and broadband industries) still somehow fail to adhere to them.

Years go by, everybody forgets, the harms of such vertical integration are either ignored or downplayed; rinse wash and repeat. Of course given that AT&T is on the cusp of successfully killing net neutrality, the end result of this merger could prove extra problematic. AT&T has been given the green light for an ocean of "creative" anti-competitive behaviors that could make life particularly difficult for streaming competitors, whether that comes in the form of zero rating AT&T's own content (while still counting competitor's traffic against AT&T caps), or by simply prioritizing the content of AT&T or its deepest-pocketed allies.

In short, the deal is likely to jack up the costs for competitors (which get passed on to you) at the same time we remove valuable safeguards protecting the health of the internet and the ability to compete on a semi-level playing field. All so a company with a long, long history of behaving badly can have more power over multiple markets. What could possibly go wrong?


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  • icon
    hij (profile), 28 Mar 2018 @ 5:18am

    Outside arbitration is a joke

    It is almost as if the other companies realize that the whole "outside" arbitration thing may not be entirely in everyone's best self interest.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 9:26am

      Re: Outside arbitration is a joke

      Arbitration is great, what are they complaining about?

      They say that mandatory arbitration is good for me, but not for them ... interesting. The rationalizations are humorous.

      reply to this | link to this | view in chronology ]

  • identicon
    kallethen, 28 Mar 2018 @ 6:31am

    Talk about the pot calling the kettle black...

    reply to this | link to this | view in chronology ]

  • identicon
    Nicolas, 28 Mar 2018 @ 6:38am

    Consumer advocates

    Consumer advocates are, in general, leftists who are funded by the bar.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 6:56am

      Re: Consumer advocates

      How's that AT$T stock doing?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 28 Mar 2018 @ 9:08am

        Re: Re: Consumer advocates

        oh yea, anyone not agreeing with your bullshit is obviously a shill

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 28 Mar 2018 @ 12:32pm

          Re: Re: Re: Consumer advocates

          > oh yea, anyone not agreeing with your bullshit is obviously a shill

          What "bullshit" would that be?

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 28 Mar 2018 @ 12:41pm

            Re: Re: Re: Re: Consumer advocates

            it obviously went above your head, you should stop now.

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 29 Mar 2018 @ 1:33pm

              Re: Re: Re: Re: Re: Consumer advocates

              it obviously went above your head, you should stop now.

              Heh, in other words, "none". Or maybe you were looking inward.

              reply to this | link to this | view in chronology ]

    • icon
      An Onymous Coward (profile), 28 Mar 2018 @ 9:34am

      Re: Consumer advocates

      Assuming that's true, what's your point?

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 9:39am

      Re: Consumer advocates

      I agree that most real consumer advocates would tend to be on the liberal side of most political issues. However, I do not think they get funding from the bar (legal not liquor) as you claim. For example, the Consumer Financial Protection Bureau is not funded "by the bar" is it?

      Those on the right (not necessarily correct) side tend to not spend much time evaluating their actions in terms of what impact it may have upon others. They seem more concerned with what impact it may have upon their dividends.

      This does not by itself make one "side" better than the other, but it does point out certain common personality traits and to where they gravitate.

      reply to this | link to this | view in chronology ]

    • identicon
      Thad, 28 Mar 2018 @ 9:57am

      Re: Consumer advocates

      [citation needed]

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 11:50am

      Re: Consumer advocates

      You’re one of them particular fellows who the the BAR is a multinational terrorist organisation composed of the (((elite))) and the NWO and I dounno lizard people from the center of the hollow earth, aren’t ya? Because that makes as much sense as saying that the governing body for lawyers is the major funder for groups of people who want our stuff to not kill us. And that by default they are liberals. Because what? Righties definitely want our stuff to kill us?

      reply to this | link to this | view in chronology ]

  • icon
    Ryunosuke (profile), 28 Mar 2018 @ 6:49am

    Yes, AT&T/Time Warner is a bad merger because of the whole monopoly issue. BUT, as previously stated, The POTUS is not in the best position to stop it because of the hostilities between himself and CNN (owned by TW).

    Secondly, it's almost like the cable companies are wishing there was some sort of Network rules that was enforced that they could run. One that could be totally neutral in what content can be run over their networks. It's funny how they are now claiming competition is a GOOD thing when they are facing a market dominance by someone other than themselves.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 9:42am

      Re:

      "some sort of Network rules that was enforced"

      Great idea!
      Let's call it the Federal Communications Commission.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 28 Mar 2018 @ 11:12am

        Re: Re:

        Good idea!

        Lets watch them fail to work and ask them to assume more power too in a never ending cycle of incompetence and increased regulatory capture.

        Like like the backdoor encryption key that only law enforcement can use debate... you just need to NERD HARDER for it to work!

        At some point we need to stop pouring the bullshit on, say its not working and start the fuck over. But no... we can't do that... hard work is for pussies lets put yet another band-aid over it and say we fixed a problem without fixing anything and coming back next cycle and bitching about the same thing a different way!

        The FCC is a fucking failure... Abolish it to send a message and create something new instead.

        reply to this | link to this | view in chronology ]

  • icon
    Anonymous Anonymous Coward (profile), 28 Mar 2018 @ 7:31am

    Monopolies are...

    ...OK for me, but not for thee.

    Two faced anti-competition snobbery from addicted monopolists.

    reply to this | link to this | view in chronology ]

  • icon
    Anonymous Anonymous Coward (profile), 28 Mar 2018 @ 9:25am

    [Definition of two-faced

    1 : double-dealing, false

    2 : having two faces](https://www.merriam-webster.com/dictionary/two-faced)

    vs

    [Definition of hypocrisy

    plural hypocrisies

    1 : a feigning to be what one is not or to believe what one does not : behavior that contradicts what one claims to believe or feel His hypocrisy was finally revealed with the publication of his private letters.; especially : the false assumption of an appearance of virtue or religion our conventional morality often serves as a cover for hypocrisy and selfishness —Lucius Garvin

    2 : an act or instance of hypocrisy a keen awareness of one's parents' hypocrisies](https://www.merriam-webster.com/dictionary/hypocrisy)

    And the difference is?

    (and markdown isn't working in preview?)

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 28 Mar 2018 @ 9:26am

      Re:

      Whoops, got the wrong comment box.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Mar 2018 @ 9:39am

      Re:

      "And the difference is?"

      I assume you were responding to me, you answered your own question with your own comment, but I will break it down.

      When you are dealing with medical issues, you will have "symptoms" that present. To make a proper diagnosis of the problem you DONT diagnose the patient with EVERY illness that has a matching symptom and then prescribe drugs for them. That will probably kill your patient.

      What you do, is find the one illness that matches ALL symptoms as closely as possible.

      There is a lot LESS two-face going on compared to the amount of hypocrisy going on. It like saying the jaywalking, raping, murdering, pedo should get in trouble for jaywalking when the other charges are so much more of a problem than just being two faced.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 28 Mar 2018 @ 12:39pm

        Re: Re:

        WTF? You really thought he was referring to a medical condition when he wrote "two faced"? That is so stupid that you should probably have yourself checked for a medical condition.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 28 Mar 2018 @ 12:49pm

          Re: Re: Re:

          hey, you win the "stupid person of the day" award.

          I was making an example. This means I used a situation not directly associated with the subject to help explain a "concept".

          There are many ways to explain a concept, if my concept was not simple enough for you maybe you can finish grade school and come back and read the post again.

          reply to this | link to this | view in chronology ]

  • identicon
    Nick-B, 28 Mar 2018 @ 10:17am

    Cable Company Opposition

    Wait, cable companies are against something, claiming it will hurt competition and harm consumers? Must be a good thing that we should DEFINITELY implement.

    Darn it. And here I thought we could consistently vote for our best interests if we just did what these companies claim would be bad for us.

    reply to this | link to this | view in chronology ]

  • identicon
    bshock, 28 Mar 2018 @ 10:58am

    Please, don't tell anyone this merger will be bad for competition and consumers. Every time Trump's puppeteers hear something like that, they rush to embrace it and double down on it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Mar 2018 @ 11:35am

    but no warnings as to what will happen when all these companies go to court trying to overturn state laws on broadband! weird!

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 28 Mar 2018 @ 11:50am

    i LIKED THE OLD DAYS..

    When profits STAY'd solid and didnt bump around allot, which Generally meant that Charges for the service didnt Change much.
    That the Wages for the TOP FEW, were based on Profit NOT debating Contracts, and NO LOSS wages and retirement packages..that were 10+ years EVEN if they got fired..
    If the Stock holders got upset(even with no power) about the TOP wages they could DUMP the stocks and hurt the company, because it Affected THE PROFITS.
    And when the Company wanted to ADD something it Came from Profits and how much they SAVED over time to do it..

    NOW they just force the value of Stock up a few points and people JUMP IN and buy more..and they get the money from UPPING the Price of services/products.. Inflating the Profits, to get Stocks to go up, and just paying the Top wages..

    reply to this | link to this | view in chronology ]

  • icon
    PartTimeZombie (profile), 28 Mar 2018 @ 4:50pm

    from the Synergies,-yo dept

    I would like to correct that to "from the No Shit Sherlock dept".

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 28 Mar 2018 @ 11:37pm

    "Terrible For Competition And Consumers"
    Unlike all of our other policies & purchased lawmakers propping up our shitty monopolies to make sure we can screw consumers out of maximum dollars for "service" that 3rd world nations would turn their noses up at.

    You all worked so vary hard to capture the market & now are butthurt some of them decided to consolidate more to get a bigger payday. Are we sure this just isn't sour grapes that they didn't think of this first?

    If it passes, if it doesn't... there will be no more competition, consumers will get screwed even more as the corporations nickel & dime them to cover the costs of the slap fight, while still paying CEO's huge amounts for not wasting money on improving the offerings.

    A pox all all of your houses, you created the situation & for once its nice to see you getting screwed & being upset... until you work out how best to screw consumers to keep raising your bottom lines.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 29 Mar 2018 @ 1:18am

      Re:

      "Terrible For Competition And Consumers"

      It's the first half that's got them objecting. The consumers can be drained dry, but when it comes to someone shaking them down due to having a better position, now it's a problem.

      Of course the kicker is that while they only care about the first half everything I've heard would indicate that the second half is very much true as well, and as such while their objections may be entirely self-serving they are still valid and something that should be taken seriously.

      reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 29 Mar 2018 @ 7:03am

    Huge, almost monopolistic companies are bad for consumers? You don't say.

    reply to this | link to this | view in chronology ]


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