Warning that a deal for DirecTV gives AT&T too much power to stifle the Internet’s growth as a cable alternative, Christopher Keyser, the president of the Writers Guild of America West, on Tuesday urged members of a panel of the Senate Judiciary Committee to do all they can to kill it.
“Because the power to control the pipeline actually trumps the power to create, it brings with it the power to undermine the revolutionary power of the internet itself,” Keyser told senators. He said that AT&T’s deal together with Comcast’s for Time Warner Cable would give two companies more than 50 percent of cable and web subscribers and both the power and the incentive to restrict new web competitors like Amazon and Neflix.
“Nothing has the power and reach of television, but two decades of mergers have reduced the once vibrant market,” he said. “Into that world has come the Internet, opening up the possibility of enormous new content and creative, a host of new voices. Potentially this is the most exciting time for audiences and writers.
“It is no accident that a flurry of mergers is occurring in response to the potential democratization of the entertainment industry,” added Keyser. He said the deal could quickly lead to AT&T moving to prioritize the content of its partners at the expense of new competition.
Keyser’s comments came as top officials of AT&T and DirecTV defend the $45 billion deal to both the Senate panel and to one from the House Judiciary Committee.
AT&T President-CEO Randall L. Stephenson told the Senate panel that the merger combines “complimentary assets.” He said the deal could reduce programming costs and turn cable services into a profitable business for AT&T.
“You are not going to have the significant overlap of responsibilities like you do in a traditional merger,” he said, noting that in 75 percent of the country AT&T and DirecTV do not compete for customers.
DirecTV Chairman-CEO Michael D. White told both committees that the deal is part of an evolution of the entertainment industry that reflects the need to offer bundles to consumers.
The panels also heard an official from the American Cable Association urge the Justice Department and the Federal Communications Commission to impose conditions on the deal to ensure smaller cable companies can compete fairly for programming.
Legislators at both hearings expressed some skepticism that the cost savings that the companies have been touting as a reason for the deal will ever pass to the company’s customers.
“I have seen this show before,” said Sen. Richard Blumenthal, D-Conn. “I am skeptical.”
Sen. Al Franken, D-Minn., questioned why AT&T was spending money to buy DirecTV rather than using the money to compete by expanding the reach of its broadband connections and questioned whether the deal would offer any benefit to cable customers .
In the House, Judiciary Committee Chairman Bob Goodlatte, R-Va., didn’t have as strong a reaction. “It has been demonstrated repeatedly that a free and competitive marketplace yields lower prices, greater innovation, increased investment, and better services,” he said. We should strive to ensure that proposed transactions result in enhanced competitive marketplaces so that the attendant benefits continue to run to consumers.”
Congress has no formal authority to approve or halt the merger. That responsibility lies with the FCC and the Justice Department’s antitrust division.