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Porpoise101
October 22nd, 2016, 04:32 PM
AT&T is close to a blockbuster $80-plus billion deal to acquire Time Warner, a move that would singlehandedly turn America’s most storied telecom company into a content powerhouse and one of the most prominent TV, film and video-game producers in the world, according to multiple news outlets.

The proposed merger casts a spotlight on a defining movement for the giants of modern tech: Their accelerating conquest of media in an increasingly unbundled world. AT&T and Time Warner did not respond to requests for comment.

AT&T, Amazon, Google and Verizon have all surged into original content, believing it offers them a lucrative foothold into viewers’ pockets and living rooms and a unique bulwark against the rapidly changing Web and cable television landscapes.

But the consolidation of media into a fewer empires has also renewed concerns over the fairness and freedom of tomorrow’s entertainment. Telecom gatekeepers such as AT&T could steer customers to their own offerings, muscling out independent artists and limiting choice. Or they could exclude non-customers, forcing curious audiences to subscribe or go without.

“You have a big distributor owning some of the largest networks. Is everyone going to have equal access to those networks?” said Eric Handler, a media and entertainment analyst for MKM Partners.

The deal, which the Wall Street Journal first reported could be announced as soon as Saturday, would likely attract heavy regulatory scrutiny over its potential to stifle media competition or suppress innovation. Regulators, Handler said, would ask whether creators in the shadow of the AT&T juggernaut could “survive in this new ecosystem.”

Indeed, Donald Trump, the GOP presidential nominee, said Saturday that if elected he would block the merger.

"As an example of the power structure I am 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 at a speech in Gettysburg, Pa.

News of the merger follows a wave of dealmaking and consolidation that has been transforming viewers' leisure time and media spending, including Comcast's purchase of NBCUniversal in 2011.

Tech giants, meanwhile, have been aggressively encroaching on traditional media. Google has pushed into live-TV streaming. And Netflix and Amazon doubled their yearly investments on programming between 2013 and 2015, reaching a combined $7.5 billion last year, more than CBS or HBO, according to industry researcher IHS Markit. Apple, which has more mobile screens in the hands of consumers than any other company in the United States, is also making moves to offer original services and content that can be directly accessed through its smartphones and tablets.

For years, AT&T has run the pipes to push content to living room televisions or cell phones, but didn’t create the content itself. Its marriage with Time Warner would give AT&T prime control and potential influence over some of the biggest names in TV, news and film, including CNN, HBO and Warner Bros., the movie studio behind the “Harry Potter” and “Batman” films that is rivaled only by Disney and Universal for box-office supremacy.

Time Warner content also gains much of its value from being sold to multiple distributors, including cable companies such as Comcast or Cox Communications or through Verizon's FiOS service. That could undermine the value of AT&T’s exclusivity.

“There are some exclusivity options … but when you have to do deals, it really pays to be platform agnostic,” Handler said. “You have to go where the eyeballs are.”

Telecom titans like AT&T and Comcast were once content to run their businesses like utilities, providing basic services to a steady clientele and leaving the creative costs and risk-taking to a horde of producers, filmmakers and studios.

But the financial bedrock of traditional TV and wireless service looks shakier than ever. The core business for companies such as AT&T now mostly involves fighting over a shrinking household base for TV packages and a saturated audience for mobile and Internet service.

Pay-TV service – which AT&T dominates through its ownership of satellite service DirecTV, which it bought for $48.5 billion last year – is also under threat by the rise of “cord cutters,” who are trimming their cable bills or finding video and entertainment options over the Web.

The rapid reshaping of technology and consumer preference has undermined the telecom industry’s traditional moneymakers, such as cable and wireless subscriptions. Many viewers are swearing off cable packages, streaming shows over the Web to their phones or computers, and spending time on games, social media or on-demand video outside the traditional structure of linear TV.

Owning media that keeps people engaged through the life of a weekly TV series, or every day through a video game, would give a company such as AT&T an exclusive hook to ensure subscribers keep coming back.

“They’ve got this sunk investment in these assets of distribution, and distribution is changing rapidly. There’s only so much they can raise the prices on online service,” said Robin Diedrich, a senior analyst with Edward Jones. “Being able to own content that is unique to them allows them to … pay back those investments they made.”

But John Bergmayer, senior counsel at the Washington technology advocacy group Public Knowledge, also said the deal poses a major threat to consumer choice. The merged company could crowd out or block alternative programming on its TV service, give preferential treatment to its own content on its broadband Internet service, or impose higher costs for TV competitors seeking to run Time Warner shows.

In this case, the Federal Communications Commission would likely not have jurisdiction over the merger because no regulated telecom assets will be changing hands, said an industry attorney who has worked with Time Warner. Time Warner owns a single TV station in Atlanta and that could easily be cut out of the deal to avoid FCC oversight, the attorney said who spoke on condition of anonymity to discuss matters that have not been made pubic yet. Approval of the deal would likely fall to the Department of Justice instead.

The AT&T-Time Warner deal presages a broader transformation of the tech and entertainment world. TV conglomerates Viacom and CBS are also considering mergers that could be secured in the coming months.

“When a big deal like this happens, more deals tend to happen,” analysts with New Street Research told investors Friday. “It is a good time to be an asset ‘in play.’” (Story @ Washington Post (https://www.washingtonpost.com/news/the-switch/wp/2016/10/22/report-att-to-buy-time-warner-for-more-than-80-billion/#comments))

Personally, I think this has got to stop. What happened to the government fostering competitiveness? Trump, as much as I hate to say this, is right. By not fostering competitiveness for 40 years, the federal government has allowed corporate institutions to balloon out of control. We have the legislation passed too. The President is just not doing anything about it. Of course, the courts haven't been particularly helpful in this endeavor. Their big argument is that if there is a cheap monopoly it's fine.

While it may seem ok, it has many other spillover effects. It decreases innovation in the field. Firms aren't going to get ahead of other firms if they have total control of a market, or are colluding to share it. Additionally, it has probably contributed to the slower growth in wages. If there are less firms, there are less choices for workers to select for better employment. And firms have less incentive to strive to maintain better talent. It just makes corporations not work as hard as they probably should be as a whole.

phuckphace
October 22nd, 2016, 09:18 PM
with $80 billion to blow there shouldn't be a single foreigner working at AT&T and exactly zero layoffs and benefit cuts, but of course there are legions of all three - this is why nobody believes it when corporations bitch that Americans demand uncompetitive wages. FUCK OFF.

I've gone from calling for these companies to be broken up, to calling for their executives/management layer to be brutally purged Stalin style, and no I'm not joking. a tough sacrifice, but a necessary one for the long-term good of the country as a whole.

Porpoise101
October 22nd, 2016, 11:07 PM
I've gone from calling for these companies to be broken up, to calling for their executives/management layer to be brutally purged Stalin style, and no I'm not joking. a tough sacrifice, but a necessary one for the long-term good of the country as a whole.

You shouldn't mix up individuals with institutions. To get rid of the symptom you kill the man. To get rid of the disease, you kill the institution.

phuckphace
October 23rd, 2016, 08:47 AM
Porpoise101 - the institutional problem is business schools (corporate grasping is taught as a virtue) and managerial elitism. another angle is that, increasingly, management alone receives full-time hours while new hires are largely part-time, so if you want to make money you basically *need* to become a manager. and how many managers does the typical firm have or need? can everyone be a manager?

additionally, companies no longer promote from within or recognize the value of attracting and cultivating talent. every job I've ever had (not in Big Tech industry obviously) always has a sign up with the current fiscal year's turnover % presented with utter mystification as to why so many people quit. a truly unfathomable mystery why these ungrateful cogs won't accept their $9 an hour with a grim smile.

Trump's campaign needs to flog this issue tirelessly, because we know his opponent will not. this is partially the reason I get irritated when Millennials cry about Trump's sexist comments and vote accordingly... meanwhile in real life corporations are openly colluding and consolidating their power, but the biggest issue of the day is PROBLEMATIC MISOGYNY

Vlerchan
October 23rd, 2016, 12:58 PM
Because someone needs to pretend to have these opinions.

What happened to the government fostering competitiveness?
AT&T and Times Warner don't compete with each other and thus it's not straight-forward that this case falls under the remit of competition law. In their merger - it's a vertical merger, to use the legal language - there is no direct loss of competition. It's then uncertain that there is an indirect loss of competition. Just off the top of my head, there's a simple case one can imagine where the mitigated-oligopsony-effect dominating the foreclosure-effect: one can imagine a situation where the upstream-provider has a greater incentive to provide access to the downstream good and thus there is an overall decrease in prices charged for the upstream good.

This, ultimately leads to efficiency gains in the entire downstream market who benefit from the increased production of the upstream good. There should, though, probably be a clause introduced that forces AT&T to not discriminate against competing programming-providers in the downstream.

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Of course, this doesn't seem to be what happened to with the Comcast-NBCUniversal merger - I'm actually not sure what happened with it but that it isn't being invoked as a model probably isn't a good sign.

Oh, and like usual, the problem is the fixed-costs that act as a natural barrier to competition in the upstream market. Government should spend the time dealing with those instead.

Porpoise101
October 23rd, 2016, 07:52 PM
AT&T and Times Warner don't compete with each other

Time Warner is a cable company. So is AT&T. I don't quite get how they are not competing currently. Time Warner just happens to make more content stuff as well while AT&T does some other telecom stuff.

Oh, and like usual, the problem is the fixed-costs that act as a natural barrier to competition in the upstream market. Government should spend the time dealing with those instead.

What does this mean? Make government internet/cable lines? Or are you proposing to deregulate?

Vlerchan
October 24th, 2016, 01:22 AM
Time Warner is a cable company. So is AT&T. I don't quite get how they are not competing currently. Time Warner just happens to make more content stuff as well while AT&T does some other telecom stuff.
Time Warner spun off its cable arm - Time Warner Cable - as an independent company in 2009. AT&T aren't purchasing the rights to that as part of the merger - because Time Warner no longer controls it.

What does this mean? Make government internet/cable lines? Or are you proposing to deregulate?
It'd be something along the lines of government controlling the broader infrastructure - whilst the cable firms are responsible for the last mile.

phuckphace
October 24th, 2016, 10:37 AM
I suppose vertical mergers are less of an issue but it's neither here nor there because again, these firms are too large to benefit anyone but themselves and must be broken up regardless.

tiny eastern European countries like Lithuania prove that very fast and modern IT services can be delivered by local companies in a competing market, without the need for a massive oligopoly situation such as in the US (lolbertarians and their likeminded friends claim "economy of scale" to justify it - Lithuania has about 2.8 million people). as far as the actual content creation goes I don't give a fuck what happens to it - the country would survive just fine if all the entertainment channels went dark tomorrow.

Porpoise101
October 24th, 2016, 07:07 PM
Time Warner spun off its cable arm - Time Warner Cable - as an independent company in 2009. AT&T aren't purchasing the rights to that as part of the merger - because Time Warner no longer controls it.

Ah ok. I guess I got confused on that. Either way, there is an issue with having vertical mergers with media in my opinion. The media is very important and is a large influence on the people. In some ways, it's the third 'realm' of the political system (the other two are people and government). It makes me somewhat concerned that AT&T are going to be the masters of not just popular channels like HBO, but also CNN. If big corporations control all of the media, as has been happening over time, it gives them too much power for their own good. Journalists would be afraid of reprisal if their company was involved in wrongdoing for example. And net neutrality will slowly die off as things consolidate.

Luckily Trump and Tim Kaine (for what his opinion is worth) have been skeptical of this deal. It will probably die.

It'd be something along the lines of government controlling the broader infrastructure - whilst the cable firms are responsible for the last mile.
I am not exactly sure what you are saying, so I wrote an analogy to see if I understand. Correct me if I am not getting it.
Analogy:
The government builds a highway, then smaller companies build access to local areas and compete with each other on that front.

Vlerchan
October 25th, 2016, 05:54 PM
[...] companies no longer promote from within or recognize the value of attracting and cultivating talent [...]
Both places I worked full time at - a bank and a mutual fund - had internal promotions most of the way up but perhaps I have had a weird experience. Nonetheless I came up with a testable hypothesis.

In the past you had a lot less people going to college because it wasn't so affordable - Emphasis on the opportunity cost here, in particular. That means you had, on average, better people going into entry-level jobs in the work place - and, on top, people that had graduated college were less numerous and thus more expensive. But we will focus on the former point.

If there has been a depreciation in standard in entry-level employees one would expect there to be a general fall in internal promotions. And, perhaps where it's more difficult to observe performance in the service sector - i.e. there is more noise, a greater reliance on aggregate performance (which is declining) in promotion decisions emerges: in other words, you find that even the good workers get tarred with the same brush and see less promotions, on net, than would have been seen otherwise.

That aligns with the anecdotes I've heard, at least.

citation: Vlerchan (2016) 'The Poor and why they should stay Poor: A story of Declining Productivity in an Age of Vice', Quarterly Journal of Economics, 112(1), pp. 10 - 72.

tiny eastern European countries like Lithuania prove that very fast and modern IT services can be delivered by local companies in a competing market, without the need for a massive oligopoly situation such as in the US (lolbertarians and their likeminded friends claim "economy of scale" to justify it - Lithuania has about 2.8 million people). as far as the actual content creation goes I don't give a fuck what happens to it - the country would survive just fine if all the entertainment channels went dark tomorrow.
I totally agree with all this.

If big corporations control all of the media, as has been happening over time, it gives them too much power for their own good. Journalists would be afraid of reprisal if their company was involved in wrongdoing for example.
I can agree with this point on newscasting*.

Nevertheless, I see little to fear in affiliations with corporations than actual concentration - and given the expanded role of non-traditional web-blogs, webzines, and news.com in general, we are seeing a significant decline in concentration the last half-decade - this doesn't seem as bothersome as it might have been had the same occurred in 1986, when people got there news for three channels, and five papers.

---

* Though I would leave it worth mentioning that there is no special clauses for this when it comes to antitrust law.

I am not exactly sure what you are saying, so I wrote an analogy to see if I understand. Correct me if I am not getting it.
Analogy:
The government builds a highway, then smaller companies build access to local areas and compete with each other on that front.
This analogy is correct. It's the case in Ireland, and I imagine the same in Lithuania.

Vlerchan
October 25th, 2016, 05:56 PM
[...] companies no longer promote from within or recognize the value of attracting and cultivating talent [...]
Both places I worked full time at - a bank and a mutual fund - had internal promotions most of the way up but perhaps I have had a weird experience. Nonetheless I came up with a testable hypothesis.

In the past you had a lot less people going to college because it wasn't so affordable - Emphasis on the opportunity cost here, in particular. That means you had, on average, better people going into entry-level jobs in the work place - and, on top, people that had graduated college were less numerous and thus more expensive. But we will focus on the former point.

If there has been a depreciation in standard in entry-level employees one would expect there to be a general fall in internal promotions. And, perhaps where it's more difficult to observe performance in the service sector - i.e. there is more noise, a greater reliance on aggregate performance (which is declining) in promotion decisions emerges: in other words, you find that even the good workers get tarred with the same brush and see less promotions, on net, than would have been seen otherwise.

That aligns with the anecdotes I've heard, at least.

citation: Vlerchan (2016) 'The Poor and why they should stay Poor: A story of Declining Productivity in an Age of Vice', Quarterly Journal of Economics, 112(1), pp. 10 - 72.

tiny eastern European countries like Lithuania prove that very fast and modern IT services can be delivered by local companies in a competing market, without the need for a massive oligopoly situation such as in the US (lolbertarians and their likeminded friends claim "economy of scale" to justify it - Lithuania has about 2.8 million people). as far as the actual content creation goes I don't give a fuck what happens to it - the country would survive just fine if all the entertainment channels went dark tomorrow.
I totally agree with all this.

If big corporations control all of the media, as has been happening over time, it gives them too much power for their own good. Journalists would be afraid of reprisal if their company was involved in wrongdoing for example.
I can agree with this point on newscasting*.

Nevertheless, I see little to fear in affiliations with corporations than actual concentration - and given the expanded role of non-traditional web-blogs, webzines, and news.com in general, we are seeing a significant decline in concentration the last half-decade - this doesn't seem as bothersome as it might have been had the same occurred in 1986, when people got there news for three channels, and five papers.

---

* Though I would leave it worth mentioning that there is no special clauses for this when it comes to antitrust law.

I am not exactly sure what you are saying, so I wrote an analogy to see if I understand. Correct me if I am not getting it.
Analogy:
The government builds a highway, then smaller companies build access to local areas and compete with each other on that front.
This analogy is correct. It's the case in Ireland, and I imagine the same in Lithuania.

phuckphace
October 26th, 2016, 12:42 PM
I think Lithuania is a good model for what should replace our oligopolies after they're broken up. they went from primitive Soviet-era infrastructure to having ubiquitous high-speed fibre-to-the-home (FTTH) service blanketing the entire country in a couple of decades, which itself is impressive. American posters are likely reading this on an Internet connection that's still at least partially over copper (coaxial, slower) despite your ISP having more money than God - I'll leave you to guess why that is. in Lithuania you can drive to the most rural, sparsely populated areas and get FTTH service in your rustic little Baltic cabin with pagan altar out front.

here's a 600 Mb/s plan for €20 a month (https://www.teo.lt/internetas/sviesolaidinis/9109). in Murica I'm paying about 90 bucks a month for a 150Mb/s coaxial cable connection.

another interesting thing about Lithuania's IT sector is how blindly Aryan it is. a Lithuanian can attend university and get hired into the Lithuanian IT sector as a programmer expecting to earn about €28,000 annually, which places you squarely into the middle class. there's also a law that mandates all business be conducted in the Lithuanian language.