US to examine AT&T deal to buy Time Warner

BBC | Published: 09:45, Oct 24,2016 | Updated: 11:38, Oct 24,2016

 
 
AT&T-TimeWarner

The deal is believed to be the biggest so far in the world this year. — AFP photo

US lawmakers and both presidential candidates have raised questions about AT&T's deal to buy Time Warner.

The US telecoms giant, already the country's third largest cable provider, is paying $85.4bn (£70bn) for the company, which owns CNN and HBO.

A Senate subcommittee responsible for competition will hold a hearing in November.

However AT&T's chief executive Randall Stephenson believes regulators will approve the deal.

Senator Mike Lee, the Republican who chairs the antitrust subcommittee, said the deal would ‘potentially raise significant antitrust issues, which the subcommittee would carefully examine’.

The biggest merger to be announced this year would combine AT&T's distribution network, which includes 130m mobile phone customers and 25m pay-TV subscribers, with content from the Warner Brothers film studios and the cable TV channels HBO, the Cartoon Network and CNN.

The competition concerns centre on higher prices for customers and less consumer choice.

A spokesman for the Democratic presidential candidate Hillary Clinton said there were ‘a number of questions and concerns’ about the deal that regulators needed to scrutinise, but added ‘there's still a lot of information that needs to come out before any conclusions should be reached’.

Meanwhile, Republican candidate Donald Trump has said that he would block the merger if he wins, because it was ‘too much concentration of power in the hands of too few’.

The president does not have the final say - that lies with the US justice department, which can approve, block or put conditions on the takeover going through.

Other critics, such as John Bergmayer from Public Knowledge, a campaign group that promotes access to affordable media, warned that consumers may lose out from the deal. Bergmayer suggested that AT&T might let mobile customers watch TV and films from Time Warner without counting it against their data caps, which would make video from other providers less attractive.

But AT&T's Stephenson argued that there was ‘no competitive harm that is being rendered by putting these two companies together, so any concerns by the regulators, we believe, will be adequately addressed by conditions.’

The competition lawyer Amanda Wait from Hunton & Williams in Washington said it was not a straightforward issue.

‘The anti-trust division here in the US is going to have to take a hard look at how this deal changes AT&T's incentives and that's a really complicated question,’ she told BBC radio's World Business Report.

There are two main issues, she said. Firstly, whether AT&T now has an incentive to withhold Game of Thrones from other cable providers. And secondly, whether AT&T will favour its own content over others that it's carrying.

‘Is AT&T going to have an incentive to make HBO and other Time Warner channels more visible, more easily accessible on [AT&T's] various service networks and dis-favour, or maybe even hide, the other channels that it's carrying?’ she said.

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