The Department of Justice is using AT&T’s own argument for buying Time Warner to try to stop the deal
The Comcast-NBCUniversal deal was bad. So the AT&T-Time Warner deal is worse — because it’s even bigger.
That’s the gist of the argument the Department of Justice made today, in a background briefing with reporters and in its press release announcing its lawsuit aimed at stopping the deal.
AT&T says that’s a bogus argument.
But here’s the thing: AT&T and Time Warner officials have given the DOJ rhetorical ammunition here, by arguing that merging a content company with a distributor made sense — because the distribution company’s reach was so vast.
I know, because every time I’ve asked a Time Warner or an AT&T exec to explain the rationale for the deal, they point out that AT&T’s wireless service reaches the whole country (and so does AT&T’s DirecTV service, even though that service is steadily losing subscribers).
This usually comes up after I point out that Time Warner used to own a distribution company — what used to be called Time Warner Cable — but got rid of it because it didn’t see the benefit of owning both kinds of companies.
“Time Warner Cable was regional” — limited to territories where it had a license to operate — “and AT&T is national,” they would explain.
And now the DOJ is making the same argument itself — pointing out that Comcast is also a regional pay TV distributor, and federal regulators were worried enough about its acquisition of NBCUniversal* to create a long document full of restraints regulating Comcast’s behavior. (Those constraints expire next year, by the way …)
So if it’s worrisome for a regional distributor to buy a big content company, it’s an even worse one for a distributor with a national footprint. That’s the DOJ argument, in a nutshell.
We’ll see. I find the arguments that, say, AT&T would charge other distributors more to carry networks like HBO and CNN unconvincing — since the whole point of those businesses is to be distributed as widely as possible.
But that’s a different argument, and it’s not one the DOJ is making today.
* NBCUniversal is an investor in Vox Media, which owns this site.