Telecommunications conglomerate AT&T will be acquiring media and entertainment corporation Time Warner for a price of $85.4 billion.

The two companies merging will mean the combination of content and distribution on a very large scale. The only obstacle to the deal’s completion is review by the United States Department of Justice.

The Daily Orange spoke with Larry Elin, associate professor of television, radio and film, and Brad Gorham, associate professor and director of the media studies master’s program in the S.I. Newhouse School of Public Communications, about this acquisition.

The Daily Orange: What is the significance of the Time Warner AT&T acquisition in communications and mass media?

Bradley Gorham: AT&T is one of the largest players in mobile internet service, which is becoming an important focus for advertising. Time Warner on the other hand, has a lot of content that people want to buy. They own HBO, they’ve got CNN, then of course they have the Harry Potter films, and they have a library of films that goes back to the beginning of film history in the United States. They have lots of channels, like TBS for watching comedies and TNT, which carries basketball.

So you have an owner of content that people want to watch and you have a predominantly mobile network that could allow them to watch that content easily anywhere they are at any time. The bet is that they can work out the best way to do it so they can optimize advertisement. And not just any advertisement, really micro-targeted advertisements.

Larry Elin: The AT&T Time Warner merger will re-vertically integrate the company or conglomerate. Mobile distribution is the future. Vertical integration is one company controlling its entire supply chain, intellectual property all the way through distribution.

The D.O.: Why is the merger under regulatory scrutiny by the government?

L.E.: One (commission) is the Federal Communications Commission, the FCC. It has three main interests. It’s marching orders from the government in 1934 were “you must act in the consumer’s convenience, interest, and necessity.” When it regulates in the consumer’s interest, it wants to make sure there is competition. There is a belief that competition creates better service at better prices.

The other ones are the FTC and the SEC. So you’ve got a lot of regulatory agencies that, because of what they’re supposed to do, have an interest in an acquisition as big as this one. They try to figure out what the consequences might be.

B.G.: Their concern is that if you provide the cable through which people get content and now you control one of the major producers of content, you could be tempted to make it harder for your other cable companies to carry (your content).

The D.O.: Donald Trump claims he will block AT&T’s acquisition of Time Warner. Can he do that? What would that entail?

B.G.: The president can’t just blanket say that isn’t going to happen. He will nominate somebody to be Attorney General of the United States and to head the Justice Department. Whoever the next president is will get to appoint people, but these are set terms. It’s not like he could just change the FCC overnight. There is a federal bureaucracy that exists outside of the top positions and they still carry on and do their work.

The D.O.: What could this mean for viewers? Will the content change?

L.E.: Most average people won’t see any change. Nothing horrible will happen to consumers.

B.G.: You could conceivably see how CNN gets the message of “go soft on AT&T when you cover internet and technology.” I think the reality, though, is that these kinds of companies are under such scrutiny, and journalistic norms are such that journalists would bristle at not being allowed to cover the parent company.

The D.O.: As these huge companies converge, what happens to the market? Is it good or bad?

B.G.: It depends how you look at it. (The companies) would argue it’s better for consumers because they would use their synergies to better tailor the customer experiences at economies of scale that make it cheaper for audiences. The evidence is not necessarily there that all of these cable mergers have brought prices down.

From the consumer’s standpoint, you could say, “It’s easier for me to get HBO GO or it’s cheaper as an AT&T customer for me to get HBO GO, hey that’s great!” Does it stifle competition? It certainly potentially could.

The D.O.: What are the chances this deal goes through?

L.E.: 50/50. They could find all kinds of reasons to say no and they could find all kinds of reasons to say it’s OK. It certainly doesn’t create a monster that’s any different than Disney, Fox, Viacom, CBS or any of the other media conglomerates that we already have.

B.G.: It’s very high. I think it is very likely that this merger will be allowed to continue. There may be various conditions placed on it. But I would be very surprised if this particular merger was not allowed.

Published on October 31, 2016 at 11:42 pm

Contact: mpmoor02@syr.edu