The Justice Department has decided to force conditions on the AT&T-Time Warner deal that make it unpalatable for both companies. There seems no real reason for this position, and the approach threatens to seriously hamper traditional TV companies as they seek to compete online.
Chapter 1: The Justice Department decision about AT&T/Time Warner deal (2:10)
Will outlines the decision by the anti-trust division of the Justice Department. After a year with no word from the government on the deal, yesterday the anti-trust division finally issued its opinion. Makan Delrahim, the new head of the anti-trust division, met with Randall Stephenson, head of AT&T. He told Mr. Stephenson that AT&T must either sell DirecTV or sell Turner, which includes CNN, for the deal to be approved.
Before his approval as head of the anti-trust division, Mr. Delrahim said he did not see any reason for the deal not to be approved. It is not clear what he has learned to turn his opinion against the deal.
Chapter 2: Similarities to the Comcast/NBCU merger (6:20)
I observe that the AT&T-Time Warner merger is very similar to the Comcast-NBCU merger, which was approved by regulators with much more reasonable conditions. For example, Comcast had to agree to offer NBCU TV content to other operators at competitive rates.
When the AT&T and Time Warner was first announced, neither Will nor I saw it as a particularly good idea. However, both of us are scratching our head over this decision by the Justice Department. The argument that this will give AT&T too much market power does not seem to hold water. It leaves us both wondering if other media deals, like the Discovery-Scripps deal, might
Chapter 3: How will other media deals be viewed by the Justice Department (12:45)
Will and I wonder how other deals, like Discovery-Scripps and Disney-Fox, will fare if a deal like AT&T-Time Warner receives such treatment from the Justice Department. The uncertainty comes at a terrible time for traditional TV media companies. They must react very quickly to online developments, from companies like Netflix and Google, and they cannot afford delays of a year or more with bad outcomes if they are to compete.
Chapter 4: Online video providers continue to move into premium video (16:00)
Facebook continues to make premium video a high priority. Apple has signed Jennifer Aniston and Reese Witherspoon to a program it is producing. With online providers moving at this pace, traditional TV companies do too.
Chapter 5: Delrahim in the hot seat (19:00)
Will thinks this puts Mr. Delrahim in the hot seat. If AT&T sues the government over this, he will have to explain why he reached the decision he has, particularly because he saw no problem with the deal before.
Chapter 6: Discovery Scripps deal a logical deal to do (20:25)
Discovery is putting together a new online service called Philo with Scripps and other partners. The Philo approach is exactly the type of experimentation traditional TV broadcasters should be doing as they work to adapt to the online world. Part of that activity is to consolidate businesses where it makes sense. However, if the Justice Department slows such deals to a crawl, it could be very damaging to the ability of TV companies to compete online.