The Comcast-NBCUniversal deal was bad. So the AT&T-Time Warner deal is worse — because it’s even bigger.
The Department of Justice is using AT&T’s own argument for buying Time Warner to try to stop the deal
Turnaround!
HBO
Peter Kafka covered media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.
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.
This article originally appeared on Recode.net.
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