Earlier this week, AT&T dropped the news that it plans to acquire Time Warner for over $85 billion. While this move certainly makes sense for the second-largest wireless carrier in the US (given how the company's looking to diversify its portfolio and revenue streams) it also raises some concerns which may make the Federal Trade Commission and the US Department of Justice reluctant to approve the acquisition. Yes, AT&T is arguing that its purchase of Time Warner would be a vertical merger and not a horizontal takeout because the company technically isn't buying a competitor but an entertainment conglomerate whose services complement those of AT&T, but this move can still be seen as anti-competitive.
That issue is what Bernie Sanders, US Senator and a member of the Democratic Party is arguing in an open letter to Acting Assistant Attorney General Renata Hesse sent earlier today. In his letter, Sander labels the deal as being "consequential" for the US democracy. He claims that a potential merger of AT&T and Time Warner would not only lead to less diverse viewpoints and news sources but would also hurt consumers. He draws a parallel with AT&T's acquisition of DIRECTV which was completed last year and resulted in higher prices and what Sanders describes as increasingly anti-competitive behavior from the wireless carrier, referring to the company's zero-rating of DIRECTV products which potentially violate existing net neutrality rules. The US Senator points out that all of this happened in spite of the fact that AT&T claimed the purchase of DIRECTV would benefit consumers. Last but not least, the popular politician also stated that an approval of this deal could set a precedent for a wide variety of similar transactions. Sanders claim such turn of events would additionally harm the competitive and free spirit of the US market, possibly alluding to recent reports that T-Mobile would be a top takeout target if AT&T manages to acquire Time Warner.
Whether Sanders' fears are justified or not is up for debate, but he does have a point when he claims that this acquisition could be prevented with US antitrust laws despite the fact that AT&T isn't taking out a direct competitor. Namely, if this transaction is approved, it could result in a so-called vertical monopoly in which content production and distribution are owned by a single entity. If a content distributor controls produced content, it could favor its own content over other when it comes to distributing it which would be anti-competitive towards other producers. While one could argue that AT&T already does that with DIRECTV, Time Warner is a significantly bigger beast which is why it is now under a lot more scrutiny. Whether Sanders' letter amounts to anything or not remains to be seen, but one thing is sure – the media landscape in the US could soon experience some major changes.