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Ruling Expected Soon In AT&T/Time-Warner Merger Case

Jun 12, 2018
Originally published on June 12, 2018 7:16 am
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RACHEL MARTIN, HOST:

Today may mark the beginning of some big changes in the American media industry. A federal judge will hand down his decision on whether AT&T is free to take over Time Warner. Time Warner owns Warner Bros. Studios and numerous cable channels. AT&T provides broadband and telephone services and also owns DirecTV. The Justice Department opposes this deal. Steve Inskeep talked with NPR's David Folkenflik about what's at stake.

STEVE INSKEEP, HOST:

So why would the Justice Department be opposed?

DAVID FOLKENFLIK, BYLINE: The Justice Department has said that it's too big. Too big is too much - that consumers are going to be throttled by the idea. It's almost two halves of the same industry - the people who create the content, the people who funnel it to you getting together. It's too much. They have problems with it. They want to protect the consumer. That's the argument. Trump made that claim on the campaign trail. And he also, at times, seemed to tie it to his critique of CNN, which, of course, is one of Time Warner's major properties.

INSKEEP: So the implied - not quite explicit but heavily implied threat is that Trump didn't like CNN's coverage. And therefore, he was going to go after CNN's corporate parent because they had this vulnerability. They wanted approval for this merger.

FOLKENFLIK: That's right. Now to be fair, the head of his antitrust unit is widely respected by lawyers on both sides of this case and both sides of this issue. But even though the judge barred discussion of Trump's statements on this, it looms over the entire case.

INSKEEP: With that said, there is this real question - right? - I mean, the question of CNN or HBO or TNT getting into my house over an AT&T broadband connection. And is that too much power in one place? That's the issue.

FOLKENFLIK: Well, I think there's questions of whether or not AT&T would privilege, you know, in some ways, Turner broadcasting channels from Time Warner, from HBO - the like - over those from some of its competitors. After all, we've seen this week the repeal of net neutrality take place. And that means that broadband providers are able to privilege content coming from originators with whom they have preferential deals. AT&T says they're not going to do that. They don't want their own content if they take over Time Warner to be slowed down when Comcast gets to stream it to its subscribers. But there's a lot of question about how these providers will operate net neutrality. This is, in some ways, part of the concerns implied by the government's case.

INSKEEP: OK, so this is just one part of a bigger debate - is what you're telling us - about the concentration of power on the Internet and in content. What are the options for the judge here? Is it just a thumbs-up, thumbs-down?

FOLKENFLIK: Well, that's the cleanest way it would work. There are times that such things are approved but with conditions. The government has indicated it would be OK for the deal to go through if AT&T were forced to sell off some of Time Warner's most important assets. And that's most of its television properties. AT&T has said that's just a non-starter - that the deal would be dead if that were put in place. The judge could also put certain kinds of provisions and protections in place for, say, five or 10 years - in terms of the way in which AT&T treats some of Time Warner's competitors, in terms of cable channels and the content that its rivals provide. Part of the reason why this antitrust chief brought the case against the AT&T-Time Warner deal was that he didn't want to just simply have a regulatory restrictions. He wanted there to be clarity. And he wanted the judge to either block the deal or put such restrictions on it that he thought that the harm to consumers would be mitigated.

INSKEEP: David Folkenflik, setting aside for a moment the president's complaints about CNN, does this case show that he's keeping a campaign promise to crack down on big corporations?

FOLKENFLIK: Well, it's the first in a series of such moments that will test that. We're going to see the question of Sprint and T-Mobile - the mobile competitors are seeking to combine. And Disney is looking to take over most of the entertainment properties of 21st Century Fox. That would be a combination of rivals. 21st Century Fox, of course, is owned by one of the president's most important allies. That's Rupert Murdoch. And so if that goes through without objection, it would show that the president's opposition was perhaps not so principled after all.

INSKEEP: David, thanks very much.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.