AT&T CEO: Time Warner Deal Would 'Disrupt' Cable TV Model

By John D. McKinnon 

AT&T Inc. Chairman Randall Stephenson plans to tell senators Wednesday his company's deal with Time Warner Inc. will "disrupt" the long-established cable TV model in ways that will benefit consumers, according to his prepared testimony.

"It would be a gross mistake to view this transaction as anything but pro-competitive," Mr. Stephenson says in his prepared remarks, adding that the deal will create more competition for consumers while accelerating the next generation of advanced wireless broadband.

AT&T and Time Warner executives are preparing to defend their proposed $85 billion merger Wednesday at a hearing of the Senate antitrust subcommittee even as they face a rapidly shifting political landscape buffeted by a wave of angry populism.

Under the proposed deal, AT&T hopes to use Time Warner's broad array of content, such as HBO, to anchor innovative new video services such as its online DirecTV Now.

But the merger deal has already raised concerns from the right and left and taken flak from President-elect Donald Trump, who criticized it on the campaign trail as too much concentration of power and promised to block it.

Time Warner chief Jeff Bewkes, in his prepared testimony, will say the deal would allow his company to continue innovating in content as well as in consumer experiences, for example by adding more interactive features to video products.

But the giant deal is likely to face a barrage of questions from lawmakers, including over its potential impacts on consumers, other distributors and content producers, as well as over its sheer size.

The deal would combine AT&T, which has millions of pay-TV subscribers and wireless customers, with one of the nation's most prized media content companies. Time Warner includes HBO as well as the Warner Bros. studios, plus networks including CNN and TNT.

The proposal comes at a time when some lawmakers in both parties are expressing discomfort with concentration in some industries, including media and telecommunications.

When Wednesday's hearing was announced, the antitrust subcommittee's chairman, Sen. Mike Lee (R., Utah), and its top Democrat, Sen. Amy Klobuchar of Minnesota, issued a joint statement saying that the deal "would potentially raise significant antitrust issues" which they promised to "carefully examine."

The deal will be examined at length by antitrust enforcers, and the senators have no say in their final decision on approving the deal. Still, the lawmakers can reflect and contribute to the public mood, which polls -- and election outcomes -- suggest has grown more populist and anti-big business, as well as anti-big government, in recent years.

Ms. Klobuchar said in a statement on Tuesday that she is concerned the deal "could be used to undermine competition at the distribution level, harm independent providers, and drive up prices for consumers."

Some lawmakers also are concerned that the deal comes at a time when big broadband companies such as AT&T are beginning to find ways around the Obama administration's so-called net neutrality rules.

Those rules require internet service providers to treat all content equally, without blocking or slowing. But several providers, including AT&T, are giving consumers big incentives to favor some video content by providing it without imposing data charges.

Write to John D. McKinnon at [e-mail]

(END) Dow Jones Newswires

December 06, 2016 19:13 ET (00:13 GMT)

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