AT&T defends Time Warner megadeal to skeptical lawmakers

[WASHINGTON] AT&T argued Wednesday its US$85 billion megadeal for Time Warner would be "pro-competitive" as lawmakers and consumer advocates expressed skepticism over the creation of new media-tech powerhouse.

"Our intent is to disrupt the existing pay TV model," AT&T chairman and chief executive Randall Stephenson told a Senate hearing on the merger of the huge telecom and broadband provider with the media-entertainment giant.

The deal would give consumers "new lower-priced options and the power to decide themselves," he said.

In his prepared statement, Mr Stephenson said that "because this transaction will make us a more formidable competitor to cable, it's going to increase competition. In fact, it would be a gross mistake to view this transaction as anything but pro-competitive."

Mr Stephenson said the two firms, with no overlap in their services, would make it easier to offer innovative content and distribution in an era facing disruption from online services such as Netflix and Amazon.

But senators offered a cautious view, saying the deal could concentrate too much power in one firm.

Subcommittee chairman Senator Mike Lee said the deal raise questions about "all sorts of anticompetitive abuses."

Mr Lee said AT&T "could increase the price or reduce access to Time Warner content" if it holds a dominant position as both a pay-TV and content provider.

Senator Chuck Grassley raised similar issues.

"There's concern that a combined company will give preferential treatment - for example, favorable channel placement and zero-rating pricing - to Time Warner's premium entertainment programming to the disadvantage of other content producers," Mr Grassley said.

"There's concern about the merged company's ability to employ 'bullying' tactics to dictate rates and terms to other networks. There's concern that this acquisition will concentrate too much power into one conglomerate, resulting in higher prices and fewer programming options for consumers."

Gene Kimmelman of the consumer group Public Knowledge warned that allowing the deal to proceed would likely mean "higher costs and fewer choices for video services, and lower-quality and less diverse programming."

Mr Kimmelman said it remains unclear how such a deal would impact emerging giants in video like Netflix.

"The fact that the technology and business models of online video may allow for a better world for consumers is no guarantee that it will actually happen," Mr Kimmelman said.

"If a single company is able to control many of the key inputs to online video, from content production to last-mile transmission, then the competitive promise of this new market could be snuffed out, or at least limited."

AFP