Making Sense of AT&T’s Bid for Time Warner

“Let’s be honest, prices aren’t going to go down because of this,” said Rich Greenfield, a media analyst at BTIG Research. “I don’t think vertical integration lends itself to consumer benefits.”

The worry among consumer groups and rivals, of course, is that for AT&T to make the deal work strategically and financially, it is going to use Time Warner’s content as a weapon against its rivals by raising the price that they pay for carriage of channels such as HBO and CNN, while integrating those same channels into new AT&T offerings at lower prices. Randall Stephenson, AT&T’s chief executive, dismissed that notion, calling it “illogical” and saying he wants to “dispel” such an idea. He insisted he has no intention to limit Time Warner’s content on rival systems and that “it doesn’t make business sense” to restrict the distribution of Time Warner programming. Instead, he said, he sees the benefits of the merger coming from the additional data AT&T will be able to provide to Time Warner — and advertisers — about what consumers are watching, as well the ability to create specialized, interactive programming for AT&T’s mobile customers that he expects other distributors will copy. Still, he suggested that his ultimate goal is to create a wireless network using next-generation technology known as 5G that competes not just with wireless providers, but with cable companies, by providing high-speed broadband and television service. “I will be sorely disappointed if we are not going head-to-head” with cable providers by 2021, he said. That notion may be both attractive and unattractive to regulators.