John Turner, associate professor at the Terry College of Business at the University of Georgia, on the economics of the AT&T/Time Warner merger:
Comments:"This merger is important because the combined company would possess market power in production of content and market power in delivery of content. Given the 2011 merger of Comcast and NBCU, if the merger is approved, it would put more pressure on non-integrated content providers and content delivery providers to pursue similar integration strategies.
“This combination would potentially give AT&T/TW the power to raise the cost of content (e.g., CNN, HBO) to rival companies that deliver content (such as cable companies), in order to promote their own content delivery services (e.g., DirecTV). A combined AT&T/TW would also potentially have the power to price data usage in its content delivery business — for example through its mobile “Sponsored Data” program — differently for TW content than for other content. Regulators, in effect, will carefully consider whether there is a set of conditions which will prevent a combined AT&T/TW from significantly increasing what consumers pay for their mobile plans, for internet service, and for content.
“If regulators approve the AT&T/TW deal, I expect regulators to consider imposing similar conditions to those imposed upon Comcast-NBCU. In that deal, the FCC required that for seven years NBCU-Comcast provide to all cable companies, at fair market value and non-discriminatory prices, terms and conditions, any affiliated content that it makes available to its own subscribers or subscribers to other MVPDs. Online video distributors, and other parties, also were to receive fair market value.”
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