Towards the end of October, it was announced that telecommunications giant AT&T would purchase the multinational media corporation Time Warner for $85.4 billion. For most people, a deal of that magnitude is difficult even to comprehend. What are the implications of such a merger? What does it mean for the average American? While at first glance it may just seem like chess between multi-billion dollar players that has limited relevance, it could affect your wallet and viewing and data options in more ways than you realize.
Consolidation of Power
What makes this deal truly alarming is just how much media power is being consolidated into a single company. Of course, Time Warner is no stranger to big mergers. It began as two separate companies, Time, Inc. (which ran Time Magazine) and Warner Communications (the holding company for Warner Bros.), which themselves merged in 1990. Then in 2000, the company was bought by AOL, and has continued to expand since then.
HBO, the CW Network, DC Comics, 10% of Hulu, and a variety of other properties all fall under the umbrella of Time Warner’s media empire. AT&T, meanwhile, is not only America’s second-largest provider of mobile services and largest landline provider, but also controls DirecTV satellite television.
As more of these companies come together, the less competition there is. Both Time Warner and DirecTV currently provide television services to a large portion of the U.S. population. Uniting them under the same company allows them to raise prices and impose other limitations on consumers, who now have fewer options to choose from.
When a giant merger occurs, we tend to focus on the negative aspects, but there could be some benefits to it as well. AT&T claims that by adding their super-fast 5G mobile network to Time Warner’s vast library of programming options, it could create a better viewing paradigm in today’s world of cord-cutting.
The appeal of cable companies always used to be that they offered such a wide array of channels and programming. However, that has come to mean paying for enormous, unwieldy content packages stuffed with channels you never watch, in order to get the few programs that you want. This is why an increasing number of people are opting to leave cable behind in favor of online options such as Hulu, Netflix and Amazon.
AT&T has proposed a new model, however, which combines the best parts of cable with the best parts of internet content. You can tailor a content package to meet your needs, with a lot of channels or only a few, then stream the content to any device you want, including your computer, television, tablet or smartphone.
How well this model would work, however, and how much it would cost, remain to be seen. AT&T claims that increased opportunities for advertising partnerships would actually lower costs for consumers, but this seems doubtful. Mergers nearly always result in higher prices and fewer options for everyone, not the other way around.
In fact, this could even open up the door for more mergers of this kind across the board, consolidating the companies you deal with even further, raising the costs to you and limiting your choices more and more. Time will tell what will ultimately happen as a result of this one merger, but chances are it will have some degree of financial—and choice—downside for average American consumers. It’s also a good reminder to keep your eye on the big players. As their influence expands, so does their control of our economy.