Telecommunications giant AT&T has agreed to purchase Time Warner for $85 billion. If approved by federal antitrust regulators, the megamerger would give AT&T control over Warner Bros. film and television studios, along with CNN, TNT, HBO and many other brands. Critics warn of further limits to competition and higher prices for customers. The merger could also allow AT&T to give preferential treatment to streaming video from Time Warner’s companies, which would violate the principles of net neutrality. Meanwhile, AT&T is bracing for what is expected to be a lengthy antitrust review of the deal, which must be approved by the U.S. Justice Department and possibly by the FCC. “If you’re not a Time Warner shareholder, … if you’re not a Wall Street banker, there is very little in this deal for you,” says Craig Aaron, president and CEO of Free Press, which has come out against the multibillion-dollar merger.
This is a rush transcript. Copy may not be in its final form.
JUAN GONZÁLEZ: We begin today’s show with the proposed merger of telecommunications giant AT&T and Time Warner. AT&T has agreed to purchase Time Warner for $85 billion. If approved by federal antitrust regulators, the merger would give AT&T control over Warner Bros. film and television studios, along with CNN, TNT, HBO and many other brands. Critics warn of further limits to competition and higher prices for customers. The merger could also allow AT&T to give preferential treatment to streaming video from Time Warner’s companies, which would violate the principles of net neutrality. On the campaign trail, both Hillary Clinton and Donald Trump addressed the merger.
HILLARY CLINTON: Look, I think it raises questions and concerns, and they should be looked into. I hear the Congress will start having bipartisan hearings, which I think is appropriate. So I’m going to follow it closely. And obviously, you know, if I’m fortunate enough to be president, I will expect the government to conduct a very thorough analysis before making a decision.
DONALD TRUMP: They’re trying desperately to suppress my vote and the voice of the American people. As an example of the power structure I’m fighting, AT&T is buying Time Warner, and thus CNN—a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.
JUAN GONZÁLEZ: Meanwhile, AT&T is bracing for what is expected to be a lengthy and tough antitrust review of the proposed merger. The deal would need approval of the U.S. Justice Department, and possibly the FCC’s approval. Wall Street analysts are trying to determine the likelihood of that approval. This is Barclays Capital Managing Director Amir Rozwadowski.
AMIR ROZWADOWSKI: Well, it’s difficult to put specific odds right now. I think that, you know, we’re digesting the fact that this was just announced very recently. But I think that, on paper, you know, there is precedent, and precedent generally is a good framework in terms of providing additional support for regulatory approval. The challenge, of course, is that we’re in a different political environment, in a different regulatory environment. And so, with this deal being announced on the eve of an election and, you know, what type of people will be put into place post that election really will factor into some of the decisions being made about the approval of this transaction.
AMY GOODMAN: AT&T has clashed with the FCC in recent years on a number of fronts. The company was among those that sued the FCC in 2015 to block the Obama administration’s landmark rules on net neutrality, which bar internet service providers from obstructing or slowing down consumer access to web content.
Meanwhile, new details have emerged about how AT&T has been spying on Americans for profit. The Daily Beast reports AT&T is keeping private call records and selling the information to authorities investigating everything from the war on drugs to Medicaid fraud. The secret plan is called Project Hemisphere. AT&T reportedly has been retaining every call, text message, Skype chat or other communication that’s passed through its infrastructure. Some of the records date back to 1987. Sheriff and police departments each pay upwards of $1 million a year for access to the call records. No warrants are needed, and AT&T requires governmental agencies to keep secret the source of the information.
Well, for more, we’re going to go to Craig Aaron, president and CEO of Free Press, which has come out against the multibillion-dollar merger of AT&T and Time Warner.
Welcome to Democracy Now!, Craig. Talk first about the significance of this megamerger.
CRAIG AARON: Well, megamerger is right, Amy. I mean, I think the first thing for people to keep in mind is just how big this deal is. In addition to the $85 billion that is going to the shareholders at Time Warner, AT&T is taking on another $22 billion in debt. So this is over $100 billion. And we need to ask ourselves: For what? What is the benefit? If you’re not a Time Warner shareholder, if you’re not a senior executive, if you’re not a Wall Street banker, there is very little in this deal for you except higher prices and a new gatekeeper over what you watch, see, hear and read every day. And so that’s why we’ve come out strongly against this merger. We don’t think it’s in the public interest. And we think it has huge problems, putting this much media power in—under one corporate umbrella.
JUAN GONZÁLEZ: And, Craig, this reminds me, just a few years ago, back in 2011, when Comcast took over NBCUniversal and Telemundo. And at the time, Comcast was able to marshal support from many of the African-American and Latino leaders in the country with promises of more diversity. Of course, famously, they put Al—they gave Al Sharpton a show for a while, subsequently, after that. But then, as soon as all the hullabaloo calmed down, then all of a sudden they started to reduce that kind of diversity in their programming.
CRAIG AARON: Right. I mean, every time they want to get one of these deals done, suddenly a company like AT&T or Comcast remembers that, hey, now we’re going to finally provide broadband to poor people in low-income communities. They make all these [promises] about new kinds of programming and promotion, but you can look back at the record of merger after merger, and most of those promises end up being broken. And once the weak conditions expire, if they even bother to follow them at all, all those promises go away, but we’re still left with this incredible concentration of power.
And if AT&T can get this deal done—they’re already, after taking over DirecTV, the biggest satellite TV company in the country. They have the most video subscribers in the country. They’re the second-biggest wireless company. They have a huge internet footprint. And now they want to own big channels like CNN, HBO, TNT, so that they can really control how that information flows, and so they can cross-subsidize themselves, move—they get to move the money from one pocket to another while raising the costs on everybody else. And the people who are going to end up paying in the end are going to be their own subscribers, who really don’t have anywhere else to turn. It’s going to show up on their monthly bills. And all these promises we’re going to hear week after week, those will disappear.
AMY GOODMAN: So, you have AT&T currently number 10 on the Forbes 500 list, one of the U.S. highest-grossing companies; Time Warner is number 99 on the list—10 and 99 forming this enormous company. Some of the pros being talked about, Craig, are the promise of new kind of content, AT&T forecasting a new phase of video innovation and arguing that the deal will unleash this. How do you answer those?
CRAIG AARON: Well, I don’t see how AT&T is going to do all this innovation when they’re so indebted. You know, I think you look at what Wall Street’s saying about this deal, and there are a lot of concerns about them having to pay off all this debt. Where is all this money going to come to invest in new products?
And second of all, are there really going to be consumer benefits in those new products, or is AT&T just going to be locking down the content, favoring their own content, making it harder for people to get what they want? What people want to do is be able to watch whatever they want at any time. What these kind of corporate mergers do is lock down that content. We can just look at what happened with Comcast and NBC. A lot of us maybe were interested in watching the Olympics over the summer. When we went on to try to do that, we were like, “Hey, how come I can’t just stream any event I want, whenever I want, online?” Well, the reason you couldn’t do that is because Comcast owned all the rights. They owned the TV rights. They owned the internet rights. And they decided that it was going to make them more money to lock you in and force you to watch it when they wanted you to watch it than when you wanted to do it. And AT&T is looking at that and saying, “Hey, we want to be able to do that, too.”
JUAN GONZÁLEZ: And what’s been the reaction on Wall Street to this merger? Because, remember, back in 2000, when AOL and Time Warner merged, it was—it was billed as one of the visionary mergers, and it turned out to be a colossal failure.
CRAIG AARON: Well, I think that’s what’s so interesting about this merger, Juan, is that normally at this point, when one of these deals is announced, I’m the only one running around saying, “Hey, wait. This can be stopped. This is a bad idea.” But this merger has not been well received, not by politicians, and not by Wall Street, either, numerous analysts being quoted that, at best, it’s a 50-50 coin flip, and many saying that they think there’s an even worse chance that it will be approved, and a lot of questions actually being raised on Wall Street to say, “Wait. What do we need this deal for? Where are the benefits? How is this going to sort of spur innovation?” and really being seen by some as more of a desperate move by AT&T. But that doesn’t make it any less dangerous, because it would lock so much content and control under the AT&T umbrella. So I think Wall Street is surprisingly skeptical about this deal, which is good news. And the politicians are a lot more skeptical about this deal, which is very good news, because it makes it a—this is really a decision that’s going to be made as a result of a political fight, a fight in Washington. And the fact that so many politicians in both parties are actually out so strongly against this merger from the start, I think, is an encouraging sign that it could actually be derailed and stopped, which would be in everybody’s best interest.