Mergers: The future of the cable bundle
When the history of our media age is written, said Elizabeth Winkler in The Wall Street Journal, last week’s $85 billion union of AT&T and Time Warner will be rightly seen as the “starting gun in the battle against tech.” The government had tried to stop the deal on antitrust grounds, arguing that allowing the telecom giant and the owner of cable networks such as HBO, TNT, and CNN to merge would lead to fewer choices for consumers and higher prices for TV and internet. But a federal judge thoroughly dismissed those concerns, instead endorsing the idea that it’s actually Silicon Valley giants that “pose real threats to media companies.” As a result, he suggested, media firms should be “pretty much free to buy, sell, and trade assets to keep from falling behind.” This merger is “all about battling companies like Facebook and Netflix,” said David Goldman in CNN.com. With AT&T Wireless, DirecTV, HBO, Warner Bros., and the Turner networks now under one umbrella, AT&T will “control both the pipes and some of the media content that flows through them.” That will allow the new company to offer content deals to subscribers, better target ads, and persuade would-be cord cutters to stick around.
“With HBO, TNT, CNN, and more, AT&T can offer major perks to consumers,” said Claire Atkinson in NBCNews.com. It could create special bundles of channels, or allow subscribers to watch certain networks or sports events free of charge when packaged with specific data plans. Last year, not long after AT&T struck the deal to buy Time Warner, it announced that consumers could get free HBO if they signed up for the company’s top-tier “unlimited plus” wireless plan. That plan is now “a go,” as is an effort to give consumers the ability to watch some media and TV channels on their mobile phones without touching their data allowance. Those are just a few ways the telecom giant is going to be able to “use its media war chest to squelch competition.”
Just don’t expect lower prices, said Christopher Mims in The Wall Street Journal. “With the rise of streaming, bundles were thought to be on the way out, making way for extremely personalized offerings” that cost less than traditional cable packages. But now, “the big bundle looks set for a big comeback.” Internet providers will likely continue to gobble up content firms, and thanks to “the end of net neutrality—which would have kept the internet’s gatekeepers from abusing their power to charge other companies for carrying their data”—telecom giants could restrict access to certain shows or channels. “The smart money says that further mergers along the same lines will shortly be proposed,” said Michael Hiltzik in the Los Angeles Times. And that means one thing: “Open season on consumers’ pocketbooks starts now.”