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AT&T-Time Warner Hits Snag, Comcast Trying to Buy 21st Century Fox?

First AT&T, now are Verizon and Comcast looking to buy a major media company?

James Anderson

November 17, 2017

4 Min Read
Merger rumor
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**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from September and October.**

The union associated with AT&T is supporting the company’s attempted acquisition of Time Warner.

The Communications Workers of America (CWA), an organization known for bargaining gridlocks with AT&T and Verizon, this week announced its support for AT&T’s $85.4 billion bid for the media and entertainment giant.

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CWA’s Chris Shelton

CWA President Chris Shelton says that antitrust officials need to speedily approve the merger.

“This merger is about maintaining and creating good U.S. jobs and developing new and innovative ways to deliver technology and content,” said Shelton. “A merged AT&T-Time Warner would provide much-needed new competition to companies like Google, Facebook and Amazon, where working people don’t have union representation.”

AT&T is posed to take over a massive media empire in Time Warner should the deal go through. The telecommunications behemoth could use the new resources to gather new customers and advertise better, the Washington Post writes. AT&T and fellow telcos are in an arms race, and media content is becoming a prized asset. These businesses are working to expand their market share, their customer share and all of the data that comes with those customers.

Time Warner should not be confused with Time Warner Cable, which is a separate entity purchased by Charter Communications.

The CWA’s “full support” to the acquisition contrasts with its reaction to previously swirling M&A mergers of T-Mobile and Sprint. Although T-Mobile and Sprint ended all merger talks, the union blasted any possibility of a deal as a threat to jobs.

“One of the FCC’s responsibilities is to ensure that mergers and other corporate actions are in the public interest. The massive job loss that this merger would cause is not in the public interest. The Sprint-T-Mobile merger would enrich a few corporate owners and investors at the expense of workers and consumers,” Shelton said back in October.

One of the reasons for the CWA’s more cheery outlook is that AT&T has framed its acquisition as a “vertical” merger, according to Bloomberg. A vertical merger is one where the acquired assets are either a customer or supplier and does not remove a competitor from a market. But some analysts suggest that AT&T’s already existing ownership of DirecTV coupled with new Time Warner TV assets like HBO and CNN could seriously hurt DirecTV’s competitors.

Gil Regev, chief communications officer of RGK Mobile, says AT&T has two arms of revenue in usage data and mobile content service. While Regev says that while the Time Warner deal gives AT&T “exclusivity over major TV networks” like CNN and HBO, it reflects the trend of a more mobile world.

“As audiences are moving swiftly to consume data via mobile devices, streaming services are gaining momentum over cable TV. As a result, it’s inevitable that we will see mobile operators move to take over content providers in both the U.S. and EU, trying not only to collaborate with them but bring these in-house and by thus controlling access, advertising space and quality of content,” Regev said. “What both the U.S. and EU governments should be aware of is …

… the allowance for competition, which will balance subscription rates, content quality and variety. We are really laying the foundations here for a future that is all about mobility and the fact the operators are finally part-taking in this ecosystem and not used as a mere mean to an end is an exciting one, as it means further investment in infrastructure and a much-necessary revolution in the world of commercial TV as we know it, ultimately benefiting the end consumer.”

Supporting Regev’s claim is Thursday’s news that Comcast spoke to 21st Century Fox about buying some of its assets, which include a movie studio and multiple television channels. Variety also circulates the report that Verizon is considering an offer for 21st Century Fox.

The merger, which the companies announced on Oct. 22, 2016, has been the center of much media speculation as it tries to clear scrutiny from federal antitrust authorities. The New York Times reported on a meeting between company executives and the Department of Justice, which drew conflicting accounts of where the potentially merging companies and the federal government stand on the deal. Multiple sources suggested that the Department of Justice, which works to prevent monopolies, asked AT&T to divest itself of certain properties. AT&T CEO Randall Stephenson later publicly denied that he offered to sell off assets – including the news outlet CNN – in order to make the deal more appealing to the department.

The union stated its disagreement with the idea of Time Warner having to dump CNN in order for the deal to go through.

“CWA is completely opposed to the Department of Justice – or whoever else’s – insistence that AT&T must divest CNN or DirecTV, since we have a stake at both,” the CWA wrote. “This must be a decision-making process based solely on the merits of the case.”

Liberty Media chairman John Malone tells CNBC that he is 75 percent certain the deal can get done without any divestitures.

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About the Author(s)

James Anderson

Senior News Editor, Channel Futures

James Anderson is a news editor for Channel Futures. He interned with Informa while working toward his degree in journalism from Arizona State University, then joined the company after graduating. He writes about SD-WAN, telecom and cablecos, technology services distributors and carriers. He has served as a moderator for multiple panels at Channel Partners events.

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