The deal, months in the making, is the second massive merger this year with long term ramifications for consumers across the globe. The first being the recent Bayer-Monsanto merger that will unite two aggro-chemical giants, which will control a 25 percent share of the world’s agricultural business. The current AT&T Time Warner deal will similarly unite two giants of media and communication.
AT&T can trace it’s roots back to 1885 and the founding of the original American Telephone and Telegraph Company. Today, AT&T is said to be the 23rd largest company in the world and the largest, by revenue, telecommunications company. Though they are the largest provider of landline telephone service in the United States, much of their business is in providing mobile phone service; they are the second largest provider of such service in the US. AT&T has also branched out into broadband subscription television service in the past years with their acquisition of DirecTV.
Time Warner is a major media conglomerate, third in the world in terms of television and entertainment assets, and is also the second largest provider of internet service in the United States behind only their rival Comcast. The company also owns some of the most recognizable brands in media, including HBO, CNN, TBS, New Line Cinema, and of course the Warner Bros. family of film studios and companies. Time Warner also owns a 10 percent stake in online streaming service Hulu, a sign that the company is attempting to branch into the rapidly growing internet television market which has cut into the profit margin of their traditional cable service.
The merger of AT&T and Time Warner signals a desire by corporate power to consolidate and control a larger share of both content and the means to deliver that content. Just last year, in a move that likely provided an incentive for the AT&T Time Warner deal, Time Warner rival Comcast acquired a 51 percent controlling stake in NBC Universal, a similar union of content and delivery. Time Warner CEO Jeff Bewkes just two years ago refused an offer from 21st Century Fox to buy the company for some $85 a share, but the landscape has shifted, and Bewkes is validated in his decision to wait; the current AT&T deal amounts to $107.50 a share, in a half cash, half stock payment.
The problem with the AT&T Time Warner merger is that it consolidates the flow of information into fewer hands. In the words of CNN Money:
“Adding Time Warner would help AT&T to diversify its business beyond wireless phone and Internet services. AT&T CEO Randall Stephenson has spoken publicly about his desire to own valuable programming.Gaining Time Warner would give AT&T entry into entertainment, news and sports… With HBO and CNN on one side of the company, and wireless on the other side, AT&T would have more power to shape the future of media.”
This power will undoubtedly be focused on maintaining existing power structures and promoting the profit motive. AT&T, as a corporate entity, is amoral; it’s focus is maximizing profits. With fewer options, consumers will almost certainly be paying more for a wide range of services. The new AT&T Time Warner company will be providing internet service, as well as internet content; cable television service, as well as cable content; mobile phone service, as well as the means to connect those phones to the internet WITHOUT having said service. It gives new corporation a good percentage chance to make money off of the consumer, regardless of weather or not the consumer wishes to use that company.
The AT&T Time Warner merger also provides a larger platform for AT&T to engage in political action. CNN, a Time Warner property, is often accused of biased and even corrupt reporting, though in fairness the same can be said of corporate media in general. The resulting AT&T Time Warner company will be able to leverage CNN, and Time Warner’s other sizable media outlets, to influence the political process as a single, very wealthy entity. From campaign contributions to media coverage, the resulting corporation will be able to offer a great deal to political candidates – and of course, they will be expecting something in return, likely enough the easing of regulations.
Problematically, the AT&T Time Warner deal will also only encourage the remaining media corporations to merge as well to compete and diversify. This process, if taken to it’s logical conclusion, will result in wealth and access to media to be centered in a few hands, a monopoly that will, as stated above, have a massive influence in the political process that ostensibly is responsible for regulating them.
The merger itself will have to be approved by federal regulators. Many in that community expressed concern over the earlier Comcast NBC Universal merger, and called for further restrictions. The approval process, which will take a year or more, will likely be impacted by those concerns. However, the current election cycle will likely play a major role, as the incoming administration will almost certainly appoint the people that will be ultimately responsible for approving or denying the finalized deal.
“As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” Trump said of the issue.
As much of a heartening quote this may be to anti-trust activists, it’s almost certain that Mr. Trump is lashing out here not out of any opposition to monopolies, but because of the real or perceived connection that CNN has with the candidacy of Hillary Clinton. CNN is often called the “Clinton News Network,” and Mr. Trump is likely attempting to punish the network – and it’s corporate parent Time Warner – for this support. It is difficult to believe that Mr. Trump, a self-described billionaire and business mogul, is legitimately opposed to monopolies on ideological grounds.
Secretary Clinton has, as of this writing, not commented on the merger or Mr. Trump’s comments. However, her connection to Time Warner is very real; according to Open Secrets, the company gave $391,760 to her campaign and a similar amount to the DNC and DCCC. They have also spent about $1.4 million lobbying thus far in 2016. It is thus unlikely that a Clinton or Trump administration would be disposed to deny the merger, despite Mr. Trump’s comments to the contrary.
The AT&T Time Warner merger will almost certainly cause dramatic changes in the media, and the way that media is delivered and consumed. The question that must be asked in the face of this and other major mergers is this: what will be the long term effects of concentrating wealth and power in the hands of a few corporations? We should, as more of these mergers take place, think deeply on this question.