New York Times

[Commentary] On the face of it, there is something Strangelovian about the proposed merger between AT&T and Time Warner.

A company that controls the signal to the wireless devices of more than 130 million people, and to televisions in some 25 million households, buys a major movie studio and one of the biggest collections of cable channels in the country — potentially attaining a dominant position from which to control the information flow to a large percentage of Americans. A cultural-political Doomsday Machine is born. Mass media hegemony, or some such, follows. Or does it? Like a lot of news consumers, I’ve been struggling to get my head around this deal, which would give AT&T control of the Warner Bros. movie studio and cable networks including CNN, HBO and TBS. It would be gargantuan, carrying an $85 billion price tag. And it would further concentrate media ownership into a few powerful hands, playing to fears of a big corporate media takeover of the wild and woolly web, which has been so central to this year’s great political upheaval. But it’s all very fuzzy.

What is it about this proposed merger that has both the left and the right, on the presidential trail and on Capitol Hill, so suspicious of it, if not downright opposed? Are the stakes really so high and the potential damage so great?

“When the company that controls the pipes, so to speak, owns this very, very large content provider, it can cause a whole bunch of different horribles for consumers,” said Sen Al Franken (D-MN).

Is AT&T’s $85 billion bid for Time Warner the triumph of hope over experience? It is certainly true that the last two mega-mergers involving Time Warner fell far short of their promise. After the 1989 marriage of Time Inc. and Warner Communications, for instance, it took seven years for investors to see any real gains in the combined companies’ stock. But even that painful deal paled in comparison to the 2001 merger of AOL and Time Warner. That was the worst combination in corporate history, at least until 2008, when Bank of America bought Countrywide Financial, the toxic mortgage lender.

This time it’s different, contends Randall L. Stephenson, AT&T’s chairman and chief executive. He called the merger “a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers.” There’s something for all investors in this corporate marriage, AT&T says: Those seeking earnings growth will benefit as well as investors on the hunt for income. For one thing, the company expects the combination to begin adding to earnings the year after it closes — a quick turnaround by traditional standards. And it also says the takeover will improve its so-called dividend coverage. That’s the measure of how much excess cash AT&T has to cover its 5.3 percent dividend. Company executives always make promises when they announce big deals. But talk is cheap, delivery costly.

In many ways, President Barack Obama is America’s first truly digital president. His 2008 campaign relied heavily on social media to lift him out of obscurity. Those efforts were in part led by a founder of Facebook, Chris Hughes, who believed in the Illinois senator’s campaign so much that he left the start-up to join Obama’s strategy team. After he was elected, he created a trifecta of executive positions in his administration modeled on corporate best practices: chief technology officer, chief data scientist, chief performance officer. He sat for question-and-answer sessions on Reddit, released playlists of his favorite songs on Spotify and used Twitter frequently, even once making dad jokes with Bill Clinton. He stoked deep and meaningful connections with scores of entrepreneurs in Silicon Valley: Steve Jobs, Bill Gates, Mark Zuckerberg.

President Obama routinely pushed policy that pleased the tech-savvy, including his successful effort to keep broadband suppliers from giving preferential treatment to bigger web companies over individuals. Even his tech-specific fumbles seem unlikely to mar his permanent record: The rocky debut of HealthCare.gov, the online insurance marketplace that cost more than $600 million to build and crashed almost immediately after it went live, was later brushed off as a technical difficulty. And his administration’s pressure on Silicon Valley companies to aid its cybersecurity efforts hasn’t seemed to dampen their enthusiasm for him. Obama used his ties to the tech sector to foster diplomacy: Last year, he took Brian Chesky, the chief executive of Airbnb, with him to Cuba as an economic endorsement of the revolutionary powers of start-ups to change the world.

Randall Stephenson, AT&T’s chief executive, has a vision for the future if regulators approve his company’s blockbuster bid for Time Warner. It goes like this: In a few years, your cellphone’s data connection will be so fast that you can download a television show in the blink of an eye and a movie in less than five seconds. (That compares with up to eight minutes now for a movie.) When that happens, Stephenson has suggested, you may as well just watch TV with your cellular connection and cancel your cable subscription.

Yet the vision may be a mirage. That is because 5G is unlikely to be deployed in any meaningful capacity in the next decade. The technology, which is supposed to offer connectivity at least 100 times faster than what is now available, is at the center of a bitter fight between carriers and telecom equipment makers about how it should work. No resolution is expected until at least 2020, said Bengt Nordstrom, co-founder of Northstream, a telecommunications consulting firm. “Anything before that will just be window dressing,” he said. Even after companies and telecommunications groups define 5G and how it should operate, they face the high cost of installing a wireless network capable of handling the fast wireless speeds. “They take a tremendous amount of money to build,” Craig Moffett, a telecommunications analyst, said of 5G networks. “The obvious question for AT&T is, where is the money going to come from to build out 5G networks on a large scale?”

Most politicians have a public record of speeches and votes on issues of the day, but Donald J. Trump, the Republican nominee for president, has left a different type of record: a near-constant presence in TV shows, movies, documentaries, pageants and even professional wrestling events over 30 years. His first television appearance seems to have been an uncredited 1981 cameo on the sitcom “The Jeffersons.”

Since then, Trump has seized on opportunities to create a recurring character over three decades: a larger-than-life New York billionaire named Donald Trump. His cameos have included numerous TV shows (“The Nanny,” “Fresh Prince of Bel-Air,” “Sex and the City”) and movies (“Home Alone 2,” “Zoolander” and Woody Allen’s “Celebrity.”). Including his many interviews on late-night talk shows, appearances on beauty pageant and professional wrestling shows, and a recurring role on his reality program “The Apprentice,” his credits have numbered in the hundreds, according to the Internet Movie Database. His memorable cameos have been collected in at least one YouTube supercut.

As Tom Wheeler enters his last few months as head of the Federal Communications Commission during the Obama Administration — the next President is expected to name a new chairman — he has turned early supporters into foes and invited an expensive lobbying battle that may stymie a last-ditch pursuit of regulations that starts on Oct 27, including voting on a proposal for broadband privacy protections.

Wheeler’s last act as chairman could be overseeing the review of AT&T’s $85 billion bid for Time Warner, a mega-media deal that has already elicited protests from some politicians and consumer advocacy groups. AT&T and Time Warner will most likely try to avoid an FCC review by selling off the small number of broadcast television assets owned by Time Warner. Yet some say that even if Chairman Wheeler does not directly review the deal, his regulations have created new restrictions for AT&T and other broadband companies at a time when they are trying to find new growth beyond their internet businesses.

Alphabet, the parent company of Google, is signaling a strategy shift for one of its most ambitious and costly efforts: bringing blazing-fast web connections to homes across America. The company is curbing the expansion of its high-speed fiber optic internet network and reducing staff in the unit responsible for the work.

Alphabet did not provide an exact number for the jobs that will be cut. Craig Barratt, chief executive of Access, the Alphabet division containing Google Fiber, also said he planned to step down because the company was shifting to new technologies and methods of deploying high-speed internet. No replacement was announced. Barratt, an Alphabet senior vice president, said he would remain an adviser to the company. The company’s fiber optic internet and television are currently available in eight metro areas, including Kansas City, Atlanta, Nashville and Salt Lake City.

Opponents of the proposed AT&T purchase of Time Warner don’t want to just block the $84.5 billion deal: They want to overturn decades of antitrust policy and case law. Until recently, that would have been all but unthinkable. But in today’s superheated and politically charged environment, they may just succeed.

Politicians were piling on recently to criticize the deal, including Donald Trump and Sen Tim Kaine (D-VA), the Democratic nominee for vice president. “Over the last 40 to 50 years, antitrust law has evolved to be almost completely indifferent to vertical mergers,” said Tim Wu, an antitrust and internet expert at Columbia Law School who coined the phrase “net neutrality” and recently wrote “The Attention Merchants” on the advertising business. In vertical mergers, a company buys a supplier; in horizontal mergers, direct competitors combine. But the new generation harks back to the original trustbusters of the early 20th century, who were most concerned about preventing corporations from gaining too much power. “The antitrust system as it stands is focused on prices to consumers, innovation and efficiencies,” Wu said. “That reflects the triumph of the University of Chicago school of economics. But there’s an older tradition, embodied by Supreme Court Justice Louis Brandeis, that says a concentration of too much power in too few hands is bad for democracy and bad for consumers.”

Alarmed by Donald Trump’s record of filing lawsuits to punish and silence his critics, a committee of media lawyers at the American Bar Association commissioned a report on Trump’s litigation history. The report concluded that Trump was a “libel bully” who had filed many meritless suits attacking his opponents and had never won in court. But the bar association refused to publish the report, citing “the risk of the ABA being sued by Mr. Trump.” David J. Bodney, a former chairman of the media-law committee, said he was baffled by the bar association’s interference in the committee’s journal.

“It is more than a little ironic,” he said, “that a publication dedicated to the exploration of First Amendment issues is subjected to censorship when it seeks to publish an article about threats to free speech.” In internal communications, the bar association’s leadership, including its general counsel’s office and public relations staff, did not appear to dispute the report’s conclusions. But James Dimos, the association’s deputy executive director, objected to the term “libel bully” and other sharp language in the report, saying in an Oct. 19 email that the changes were needed to address “the legitimately held views of ABA staff who are charged with managing the reputational and financial risk to the association.”

AT&T, in addition to its billions of dollars of capital, has another arsenal at its disposal: one of the most formidable lobbying operations in Washington. The company’s list of nearly 100 registered lobbyists already on retainer in 2016 includes former members of Congress. AT&T is the biggest donor to federal lawmakers and their causes among cable and cellular telecommunications firms, with its employees and political action committee sending money to 374 of the House’s 435 members and 85 of the Senate’s 100 members this election cycle. That adds up to more than $11.3 million in donations since 2015, four times as much as Verizon Communications, according to a tally by the Center for Responsive Politics, a nonprofit research group. AT&T has also spent decades building a national alliance of local government officials and nonprofit groups — particularly from black and Hispanic communities — that it will certainly be asking to weigh in again in Washington, as it tries to get the merger approved.

“We have seen our fair share of deals,” said AT&T’s general counsel, David R. McAtee II. “Our job is informing consumers what a good development this is for them.” But navigating this transaction will be a test of just how much influence AT&T has in Washington these days. That is particularly the case as AT&T’s lobbying team undergoes a transition after losing its longtime leader, James W. Cicconi, a former aide to President George H. W. Bush.