The big business news (and I do mean big business) today is the purchase by AT&T of Time Warner for nearly 100 billion dollars. Is there anyone other than the investors in Time Warner who actually thinks that what the country needs now is MORE concentration in media? I doubt it. The proposed deal ought to be challenged by the federal government on anti-trust grounds.
About a century ago, America made the determination that too much concentration in a particular business was a bad thing. Monopolies and oligopolies were outlawed. Over the years, a many companies were broken up. About forty years ago, AT&T itself was forced to split into eight different pieces. The company that dominated the nations phone system was no longer a national monopoly. When cell phones came along, there were multiple carriers and the competition meant that cell phone coverage was built faster and prices were less expensive. Now the cell phone industry has four basic competitors with the two largest, Verizon and AT&T, both being mostly pieces of the old AT&T. AT&T has also tried to move into other forms of content delivery; it spent nearly 40 billion dollars to buy a satellite TV provider. It uses its market power in one area to help the other. Right now, someone with an AT&T cellphone gets certain free services if they also get satellite TV from Direct TV, the AT&T company. This is exactly the type of monopolization that our anti-trust laws were designed to prevent.
Time Warner is one of the very few media giants. It owns HBO and some other pay TV services (like Cinemax); cable news channels like CNN, TNT and others; and movie and TV production studios like Warner Brothers, etc. Time Warner content is shown on all sorts of TV and other providers. Just imagine what AT&T could do in the cell phone industry by providing Time Warner content at a reduced rate on its phones. That is just an example of the perils in the creation of such a media giant.
These concerns will quickly be disregarded by those who think that AT&T will agree to some sort of restrictions that make everything fair. Sadly, it doesn't really work that way. There will always be a way for the new company to get around most of the restrictions.
The merger is bad news.
About a century ago, America made the determination that too much concentration in a particular business was a bad thing. Monopolies and oligopolies were outlawed. Over the years, a many companies were broken up. About forty years ago, AT&T itself was forced to split into eight different pieces. The company that dominated the nations phone system was no longer a national monopoly. When cell phones came along, there were multiple carriers and the competition meant that cell phone coverage was built faster and prices were less expensive. Now the cell phone industry has four basic competitors with the two largest, Verizon and AT&T, both being mostly pieces of the old AT&T. AT&T has also tried to move into other forms of content delivery; it spent nearly 40 billion dollars to buy a satellite TV provider. It uses its market power in one area to help the other. Right now, someone with an AT&T cellphone gets certain free services if they also get satellite TV from Direct TV, the AT&T company. This is exactly the type of monopolization that our anti-trust laws were designed to prevent.
Time Warner is one of the very few media giants. It owns HBO and some other pay TV services (like Cinemax); cable news channels like CNN, TNT and others; and movie and TV production studios like Warner Brothers, etc. Time Warner content is shown on all sorts of TV and other providers. Just imagine what AT&T could do in the cell phone industry by providing Time Warner content at a reduced rate on its phones. That is just an example of the perils in the creation of such a media giant.
These concerns will quickly be disregarded by those who think that AT&T will agree to some sort of restrictions that make everything fair. Sadly, it doesn't really work that way. There will always be a way for the new company to get around most of the restrictions.
The merger is bad news.
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