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
New computer algorithms and passive mutual fund managers now run the stock market.
Joseph Corr

2019-11-17 14:43:00 Sunday ET

New computer algorithms and passive mutual fund managers now run the stock market.

New computer algorithms and passive mutual fund managers run the stock market. Morningstar suggests that the total dollar amount of passive equity assets re

+See More
The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment.
Fiona Sydney

2019-08-02 17:39:00 Friday ET

The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment.

The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment. Stanford finance professor John Cochrane disa

+See More
Tencent Music Entertainment debuts its IPO on NYSE to strike a chord with stock market investors.
Amy Hamilton

2018-12-19 17:41:00 Wednesday ET

Tencent Music Entertainment debuts its IPO on NYSE to strike a chord with stock market investors.

Tencent Music Entertainment debuts its IPO on NYSE to strike a chord with stock market investors. Tencent Music goes public and marks the biggest IPO by a m

+See More
The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
Amy Hamilton

2018-09-29 12:39:00 Saturday ET

The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.

The Securities and Exchange Commission (S.E.C.) sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a privat

+See More
Bill Gates and Warren Buffett shared their best business decisions in a 1998 panel discussion.
Laura Hermes

2017-11-13 07:42:00 Monday ET

Bill Gates and Warren Buffett shared their best business decisions in a 1998 panel discussion.

Top 2 wealthiest men Bill Gates and Warren Buffett shared their best business decisions in a 1998 panel discussion with students at the University of Washin

+See More
The U.S. greenback soars in value as the Federal Reserve continues its interest rate hike.
Daisy Harvey

2018-10-07 13:39:00 Sunday ET

The U.S. greenback soars in value as the Federal Reserve continues its interest rate hike.

The U.S. greenback soars in value as the Federal Reserve continues its interest rate hike. With impressive service-sector data and non-farm payroll wage gro

+See More