John Eggerton

The Consumer Federation of America is strongly opposed to the AT&T-Time Warner merger, which is no surprise, but is using the presence of four already consolidated media companies, including AT&T, to push for a quartet of items currently before the Federal Communications Commission. CFA issued a new paper suggesting the media industry is a "tight oligopoly on steroids"—AT&T, Verizon, Comcast and Charter—that needs repairing through those industry actions. CFA said disallowing any further consolidation through an AT&T-Time Warner merger is a no brainer, but that trying to break up the others, though likely its preference, could take "decades of litigation" that might or might not bear fruit or in this case pare the trees.

The Directors Guild of America has struck a tentative agreement with ABC, CBS and NBC on a new Network Staff agreement and the National Board has voted to send it to the members for a vote. The agreement covers news, sports and operations staffers at the TV networks and some of their owned local stations. According to DGA, the new agreements include a total 7.2% wage increase staggered over the three years -- 2% the first year, 2.5% for each of the next two.

The networks will also increase their contributions to the DGA pension plan. The guild also said that there were provisions "to address opportunities" for new media projects and local station concerns about "jurisdiction, long hours and compensation," but did not elaborate. The negotiations appeared to have gone fairly smoothly, beginning in September and resolved, at least tentatively, within a few weeks -- negotiations actually concluded in early October. The current contract expires June 30. The new contract, if ratified, extends from July 1 through June 30, 2020.

The Communications Workers of America has made its opposition to Federal Communications Commission Chairman Tom Wheeler's business data services (BDS) proposal, currently circulating among the other commissioners for a vote. That came in petitions, over 7,000 of them, delivered to the FCC from CWA members. The petitioners say they oppose the BDS revamp because the FCC proposal favors nonunion companies including Sprint, T-Mobile and Verizon at the expense of companies that invest billions in their high-speed networks. CWA says the proposal will "radically cut rates for some elements of business data services," which will have "a devastating effect on investment needed for broadband expansion, especially in rural areas.” That, said the union, would result in less investment in fiber deployment, job cuts, and declining living standards for its workers.

Sen Mark Warner (D-VA) has written the Federal Communications Commission and other agencies asking what tools there are and what tools there need to be to combat crippling cyber attacks, and in the case of the FCC, how the Open Internet rules affect what Internet service providers (ISPs) can do about them.

Sen Warner, a former wireless net executive, is co-chair and co-founder of the bipartisan Senate Cybersecurity Caucus. Among the answers he wants is what network management practices ISPs can use to respond to those threats and whether the FCC's Open Internet order's suggestion that ISPs could only take steps to address “traffic that constitutes a denial-of-service attack on specific network infrastructure elements” applied to a recent hack and warranted a response from ISPs. In his letter to FCC Chairman Tom Wheeler, Sen Warner signaled the FCC needed to clarify what ISPs could do and when. "Under the Federal Communications Commission’s (FCC’s) Open Internet rules, ISPs cannot prohibit the attachment of 'non-harmful devices' to their networks," he wrote. "It seems entirely reasonable to conclude under the present circumstances, however, that devices with certain insecure attributes could be deemed harmful to the 'network'—whether the ISP’s own network or the networks to which it is connected. While remaining vigilant to ensure that such prohibitions do not serve as a pretext for anticompetitive or exclusionary behavior, I would encourage regulators to provide greater clarity to internet service providers in this area."

Senate Judiciary Committee Chairman Charles Grassley (R-IA) said that the proposed $86 billion merger between AT&T and Time Warner would get a thorough vetting in his committee. “This is the biggest deal of the year, combining one of the nation’s largest telecommunications providers with a media and entertainment giant," said Chairman Grassley. "It’s imperative that the antitrust regulators conduct a robust review of the proposed acquisition." "As the process moves forward, the Senate, and the Judiciary Committee, can and will conduct oversight and ask questions about the transaction, including a hearing to examine the impact on competition and consumers," he said.

David Goldman, chief telecom counsel for the House Commerce Committee Democrats, says his boss, Ranking Member Frank Pallone (D-NJ), is all for harmonizing the Federal Communications Commission's and Federal Trade Commission's online privacy authority, but that means the FCC should proceed with its vote on strong new broadband privacy rules and Congress should give the FTC rulemaking authority so it can impose similarly strong rules on edge provider collection and sharing of data.

Ranking Member Pallone has been pushing the FCC to vote the rules amid ISP pushback and arguments the FCC should either not do so, or put its most recent version out for further comment. That last point was made in a panel session after the speech by TechFreedom President Berin Szóka, who said they were, to a degree "operating in ignorance" when talking about a proposal whose details they have not seen. FCC Chairman Tom Wheeler did put out a fact sheet on the changes to his proposal, but did not seek public comment on it.

Veteran consolidation critic Sen Al Franken (D-MN) has serious issues with the AT&T-Time Warner merger, he told Federal Communications Commission Chairman Tom Wheeler and Attorney General Loretta Lynch in letters to both Oct 24.

Sen Franken urged the "highest level" of scrutiny and could do some scrutinizing of the deal himself or at least of the players, particularly if Democrats win back the Senate. Sen Franken said he is skeptical of any further media consolidation. "Combining these behemoths would create a mega media conglomerate with both the incentive and ability to use its platform to harm consumers and competitors alike," he said. AT&T has said its platform would be open to competing programmers and signaled the digital rights to Time Warner programming would be available as well, but Sen Franken signaled he is not assuaged by AT&T CEO Randall Stephenson's suggestion behavioral conditions would take care of concerns about access to content. "I have serious doubts about the enforceability and reliability of such conditions as a remedy for anticompetitive behavior," Sen Franken said. He cited the Comcast-NBCU deal, which he also opposed, and the protracted fight with Bloomberg TV over "news neighborhooding" prohibition as an example of those conditions not working as advertised. He also cited AT&T's DirecTV price hike increases and accusations that it failed to meet some commitments in the BellSouth/Cingular integration.

Combining telecommunication giant AT&T with Time Warner and its content assets that stretch from CNN to the Harry Potter film franchise was bound to draw fire from media consolidation foes, and that was the case Oct 23 and 24 as details of the merger deal emerged.

Mike Copps, something of the elder statesman of consolidation critics, called the deal "unthinkable." "The sorry history of mega mergers shows they run roughshod over the public interest," said Copps, now a special advisor to Common Cause and formerly Federal Communications Commission Democratic chairman and commissioner. "Further entrenching monopoly harms innovation and drives up prices for consumers. The answer is clear: regulators must say no."

Gene Kimmelman, who heads up Public Knowledge, said, “[W]e see many competition concerns related to preferencing their own services and content in ways that may harm consumers."

Demand Progress Executive Director David Segal said the deal would be "disastrous' for the public. "This takeover would result in a dangerous concentration of economic and political power that could lead to higher costs, curtail consumer choice, and potentially constrain speech and information access," he said.

The Parents Television Council said: "AT&T’s purchase of Time Warner will create an entertainment behemoth, and no doubt the corporate spin-masters will emphasize benefits to consumers. But if history is our guide, this merger should be of great concern to families."

Time Warner has agreed to pay a $1.75 billion break-up fee to AT&T if it accepts a competing offer from the telecommunication company’s mega-deal, while the phone company is on the hook for $500 million if it can’t obtain the necessary regulatory approvals for the $108.7 billion merger.

According to an 8-K document filed with the Securities and Exchange Commission Oct 24, Time Warner will have to pay the break-up fee if the AT&T deal is terminated if the programmer enters into an “alternative acquisition agreement” that did not result in a material breach of the original deal with AT&T. AT&T is on the hook to pay Time Warner $500 million if the deal is terminated for circumstances “relating to the failure to obtain approvals, or there is a final, non-appealable order preventing the transaction, in each case, relating to antitrust laws, communications laws or utilities laws.” Either party can cancel the deal if it does not close by Oct 22, 2017, or in the case of special extensions, April 22, 2018.

With its huge distribution footprint and data about its consumers, AT&T and Time Warner expect to be able to create innovative advertising products, in addition to new forms of content that would appeal to an increasingly mobile viewership for video. “We can make the advertising more interesting for your house, versus somebody next door,” said Time Warner CEO Jeff Bewkes.

With AT&T offering addressable advertising across new TV and mobile platforms, viewers would see products they’re interesting in. “That means more consumers get a better experience viewing. They get less interruptions, and it means that more of the cost of programming can then be borne by advertisers and consumers get a break,” Bewkes said. “So the benefit for consumers is pretty good, very good, and the benefit for advertisers is terrific because if you look at what’s happening in that world, advertisers need more competition and this will give another outlet, not just Google and Facebook, which have been gaining all of the traction. Now you have yet another advertising choice that’s equally efficient,” he said. AT&T CEO Randall Stephenson also said that the feedback the company gets is directly from its millions of customers to fuel innovation.