• by Thom Forbes  @tforbes, December 8, 2016

A Senate antitrust panel yesterday grilled the CEOs of Time Warner and AT&T about their proposed merger, focusing particularly on the impact a combined entity would have on consumers. It’s all good, the chiefs told the pols. 

AT&T’s Randall Stephenson and Time Warner’s Jeffrey Bewkes, among other witnesses on either side of the issue, came with prepared testimony and responded to queries by panelists on the Subcommittee on Antitrust, Competition Policy & Consumer Rights.

“Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options, creating more competition for cable TV providers, and accelerating deployment of 5G wireless broadband,” Stephenson said in his written testimony.

“We believe that combining Time Warner's ability to create great video content with AT&T's physical distribution in satellite, broadband, and mobile, will help us bring consumers more choices in how they enjoy their favorite TV shows, films, video games, and other content from Time Warner and a vast array of other creators — and do so more quickly,” Bewkes said at the outset of his seven-page statement.

“The bulk of the 2 1/2-hour hearing delved into whether AT&T would have too much power if it swallowed Time Warner, which also owns TBS, TNT, Cartoon Network and Turner Classic Movies,’ writes Meg James for the Los Angeles Times. “While buying Time Warner would not wipe out a direct competitor, AT&T would become more influential because it would own both the programming and the delivery systems used by more than a quarter of Americans.”

Committee chairman Michael S. Lee (R-Utah) said “the potential antitrust favoritism the combined firm could bestow on its own products is not limited to price or access, but extends to the quality of the offerings as well.” 

AT&T’s Stephenson replied that its acquisition “would ensure more vibrant competition — not less,” James reports.

The “concept that the combined behemoth would result in better, cheaper, more usable products, or what Bewkes has termed a ‘revolution in the TV world,’ was echoed by Dallas Mavericks owner Mark Cuban, Edward C. Baig reports for USA Today. “We need more companies with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook,” Cuban told the committee. 

Meanwhile, Gene Kimmelman, CEO of Public Knowledge, opposed the deal in his testimony. 

“It is the diversity of programming owned by different people over different platforms that fuels our democracy. No one has said it better than the President-elect. It is in that environment we urge you to look at this carefully and enforcers not to take risk with a transaction that could be harmful to that democratic process and consumers’ pocketbooks,” Kimmelman said.

As a candidate, Donald Trump vigorously opposed the deal but he has not commented on the merger since the election, report John D. McKinnon, Thomas Gryta and Shalini Ramachandran for the Wall Street Journal. Stephenson and Bewkes “said Wednesday they hadn’t had direct communications with the Trump administration and believed the Justice Department would evaluate the merger fairly,” they write.

“We are anxious to put it in front of the DOJ and have the DOJ look at the facts,” Stephenson said in a briefing.

The DOJ review will decide whether the merger violates antitrust law, NPR’s Alina Selyukh explains. “In this case, AT&T and Time Warner argue their deal is in the clear because it's vertical, meaning the two companies don't directly compete and therefore their union wouldn't eliminate any competitor.

“Typically, the Federal Communications Commission would also review such a merger, sizing it up against a much broader standard of whether it's in the public interest. But the FCC's involvement in this merger is unclear — the agency wouldn't have direct oversight power if the deal did not involve FCC licenses issued to Time Warner, and AT&T has yet to reveal whether it will dump such licenses from the transaction,” Selyukh continues.

Despite some tough questions, the New York Times’ Cecilia Kang noted a change in tone among lawmakers who “greeted the acquisition frostily” when it was announced in October.

“We want to ensure that competition thrives in this critical market and we don’t stifle innovation or deter the emergence of cutting-edge technologies that customers demand,” said Sen. Charles E. Grassley (R-Iowa), chairman of the full Judiciary Committee, citing the tech giants Cuban also referenced. 

“The consumer is benefited from the aggregation,” said Sen. David Perdue (R-Ga.). “That is called capitalism.”