AT&T's mega-merger creates a content king. But will it wield the power fairly?


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Last year, less than six months after AT&T struck an $85.4 billion deal in October 2016 to buy Time Warner, the telecom giant announced that consumers could get free HBO if they signed up for the company’s top-tier “unlimited plus” wireless plan.

The move was a clear signal of how AT&T would leverage Time Warner’s entertainment business to support AT&T’s wireless business: The company would use Time Warner’s extensive media holdings, which include HBO, TNT, TBS, CNN, and Warner Bros. film and TV operations, to create bundles to appeal to consumers.

Those plans are a go, now that U.S. District Judge Richard Leon issued an emphatic ruling on Tuesday against the Department of Justice’s attempt to block AT&T’s deal. The bundling is likely to begin in earnest — unless the DOJ appeals the case.

AT&T is already working on other offers to take advantage of its ability to give consumers the ability to watch TV on their mobile phones, a consumer phenomenon that continues to grow.

AT&T CEO Randall Stephenson surprised the media world when he revealed in April that the company was also working on a “skinny” internet TV bundle that would offer a package of non-sports cable channels for $15 — a service that would also be free for AT&T customers that opted for the company’s wireless customers.

TNT’s rights to distribute live NBA games are also among the more intriguing pieces that AT&T is now set to own. AT&T wireless customers could conceivably find themselves with free access to watch games and highlights on their phones. AT&T already owns DirecTV, which has the NFL’s Sunday Ticket package.

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And then there’s CNN, the news network that has been publicly maligned by President Donald Trump and led to speculation that the DOJ’s lawsuit was politically motivated. CNN already claims a broad digital reach, but its live TV programming still requires a cable subscription. That could change for AT&T customers.

The question remains, however, whether this will provide consumers with greater competition and lower prices, or if it will be an easy way for AT&T to overpower other companies.

In his 172-page ruling, Leon rejected all of the DOJ’s arguments about why the combination would be bad for competition and, therefore, bad for consumers. He reserved his strongest line for the DOJ’s claim that AT&T could use HBO as leverage with competitors.

“At the risk of stating the obvious, this is a gossamer-thin claim,” Leon wrote.

Central to Leon’s reasoning was the disruption of the traditional TV market and the emergence of internet-based TV bundles and direct-to-consumer services offered by Netflix and Amazon. Consumers continue to abandon pricey cable TV subscriptions, and advertisers now spend more online than on TV.

AT&T knows this first-hand, having seen subscribers to its DirecTV satellite service decline and consumers move to its internet-based DirecTV Now service.

With Time Warner, AT&T can now offer services similar to tech competitors.

“The decline in traditional [cable TV] subscriptions is just one symptom of the increasingly competitive nature of the video programming and distribution industry,” Leon wrote in his ruling.



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