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
The Federal Reserve System conducts monetary policy decisions, interest rate adjustments, and inter-bank payment operations.
Dan Rochefort

2021-04-13 09:26:00 Tuesday ET

The Federal Reserve System conducts monetary policy decisions, interest rate adjustments, and inter-bank payment operations.

The Federal Reserve System conducts monetary policy decisions, interest rate adjustments, and inter-bank payment operations. Peter Conti-Brown (2017)

+See More
Harvard economic platform researcher Dipayan Ghosh proposes some alternative solutions to breaking up tech titans such as Facebook, Google, Apple, and Amazon.
Olivia London

2019-07-23 09:22:00 Tuesday ET

Harvard economic platform researcher Dipayan Ghosh proposes some alternative solutions to breaking up tech titans such as Facebook, Google, Apple, and Amazon.

Harvard economic platform researcher Dipayan Ghosh proposes some alternative solutions to breaking up tech titans such as Facebook, Google, Apple, and Amazo

+See More
New York Fed CEO John Williams listens to sharp share price declines as part of the data-dependent interest rate policy.
Dan Rochefort

2019-01-02 06:28:00 Wednesday ET

New York Fed CEO John Williams listens to sharp share price declines as part of the data-dependent interest rate policy.

New York Fed CEO John Williams listens to sharp share price declines as part of the data-dependent interest rate policy. The Federal Reserve can respond to

+See More
St Louis Federal Reserve President James Bullard indicates that his ideal baseline scenario remains a mutually beneficial China-U.S. trade deal.
Charlene Vos

2019-06-09 11:29:00 Sunday ET

St Louis Federal Reserve President James Bullard indicates that his ideal baseline scenario remains a mutually beneficial China-U.S. trade deal.

St Louis Federal Reserve President James Bullard indicates that his ideal baseline scenario remains a mutually beneficial China-U.S. trade deal. Bullard ind

+See More
President Trump considers imposing retaliatory economic sanctions on Chinese products.
Peter Prince

2018-01-10 08:40:00 Wednesday ET

President Trump considers imposing retaliatory economic sanctions on Chinese products.

President Trump considers imposing retaliatory economic sanctions on Chinese products and services in direct response to China's theft and infringement

+See More
AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.
Amy Hamilton

2019-04-30 19:46:00 Tuesday ET

AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.

AYA Analytica finbuzz podcast channel on YouTube April 2019 In this podcast, we discuss several topical issues as of April 2019: (1) Our proprietary

+See More