The Trump administration weighs the pros and cons of a potential mega merger between AT&T and Time Warner.

Laura Hermes

2018-05-08 13:39:00 Tue ET

The Trump administration weighs the pros and cons of a potential mega merger between AT&T and Time Warner. Recent stock prices show favorable trends for both AT&T and Time Warner in light of this prospective vertical integration. U.C. Berkeley economist Carl Shapiro defends the Justice Department's lawsuit against AT&T and Time Warner due to antitrust concerns. Shapiro suggests that this $85 billion mega merger would raise prices by $286 per annum for pay TV consumers. The structural change poses an imminent threat to the current market development of online video content curation. Further, this deal would spur AT&T with its cross-equity ownership of DirecTV to charge pay-TV rivals more for Time Warner video content. The latter prediction applies specifically to the Turner family of news and sports shows.

AT&T would face the incentive to negotiate contracts with other cable and satellite TV providers such as Comcast to constrain content curation to more cost-effective online video services. This vertical integration would encourage anti-competitive behaviors to the detriment of pay TV consumers.

In contrast, Chicago chair professor Dennis Carlton opposes the Shapiro antitrust thesis. Carlton points out that pay-TV consumers can enjoy net benefits in close association with this M&A deal. When AT&T merges with Time Warner, this merger would save consumers money since this vertical integration of a pay-TV provider and a movie-and-TV giant would build a more efficient company. Carlton highlights the Achilles heel in the Shapiro antitrust thesis: Shapiro underestimates how many people would leave pay TV altogether, and overestimates how many people would leave their pay TV provider if they lose access to the Turner family channels of movies and TV shows. On cross-examination, however, senior trial attorney Craig Conrath seeks unsuccessfully to push Carlton to concede that Comcast's vertical acquisition of NBCU content subsidiary results in more expensive movies and TV shows. Whether the $85 billion mega merger can prove to bear fruits for pay TV consumers remains an open controversial mystery. The Trump administration has to weigh the pros and cons of this vertical merger between AT&T and Time Warner.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More
Tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom.
Dan Rochefort

2019-05-03 11:29:00 Friday ET

Tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom.

Key tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom. LinkedIn cofounder and serial entr

+See More
JPMorgan Chase CEO Jamie Dimon views wealth inequality as a major economic problem in America.
Monica McNeil

2019-12-19 14:43:00 Thursday ET

JPMorgan Chase CEO Jamie Dimon views wealth inequality as a major economic problem in America.

JPMorgan Chase CEO Jamie Dimon views wealth inequality as a major economic problem in America. Dimon now warns that the rich Americans have been getting wea

+See More
CNBC stock host Jim Cramer recommends Caterpillar and Home Depot during the current U.S. stock market rally.
Charlene Vos

2019-03-15 13:36:00 Friday ET

CNBC stock host Jim Cramer recommends Caterpillar and Home Depot during the current U.S. stock market rally.

CNBC stock host Jim Cramer recommends both Caterpillar and Home Depot as the U.S. bull market is likely to continue in light of the recent Fed Chair comment

+See More
Federal Reserve institutes the third interest rate cut with a rare pause signal.
Daisy Harvey

2019-12-10 09:30:00 Tuesday ET

Federal Reserve institutes the third interest rate cut with a rare pause signal.

Federal Reserve institutes the third interest rate cut with a rare pause signal. The Federal Open Market Committee (FOMC) reduces the benchmark interest rat

+See More
Anti-competitive corporate practices may stifle U.S. innovation.
Fiona Sydney

2020-01-15 08:31:00 Wednesday ET

Anti-competitive corporate practices may stifle U.S. innovation.

Anti-competitive corporate practices may stifle U.S. innovation. In recent decades, wage growth, economic output, and productivity tend to stagnate as U.S.

+See More
Treasury Secretary Steve Mnuchin indicates that the Trump team puts the trade war with China on hold.
Olivia London

2018-05-19 09:29:00 Saturday ET

Treasury Secretary Steve Mnuchin indicates that the Trump team puts the trade war with China on hold.

Treasury Secretary Steve Mnuchin indicates that the Trump team puts the trade war with China on hold. The interim suspension of U.S. tariffs should offer in

+See More