If Media Giants Grow, So May Your Bills

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Date: Mar. 22, 2018
Publisher: The New York Times Company
Document Type: Video file
Duration: 00:02:06
Length: 389 words
Content Level: (Level 4)

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The government doesn't want you to pay too much to watch your shows. That's why the Justice Department says it is challenging the proposed merger between AT&T and Time Warner
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Your channel.

The companies that beam or stream your favorite shows onto your screen and how much they can get away with charging you attracts a lot of scrutiny when they start racking up acquisitions and cornering the market place. What keeps them in check are antitrust laws.

Unreasonable curbs on competition are in theory at least criminal.

Too much control over market share can happen in two ways. The first is horizontal integration. If one studio gains monopoly power by buying of lots of other studios and the resulting company squeezes out the competition across an industry or jacks up prices for consumers it could be violating antitrust laws. The second way is vertical integration of the supply chain. In the late 1940s the government actually went in and busted up the Hollywood studio system because a few behemoths owned almost all the studios and the theaters. And they controlled the distribution rights to almost all the films. That made it extremely difficult for other companies in the business of making or selling or showing movies. If we look at today's digital landscape that would be like if an Internet provider also owns a studio that makes the shows and the channels premium networks or streaming platforms. And in some cases, maybe even the device you watch on, kind of like say Apple or Amazon. The government usually leaves these kinds of companies alone if the growth happens organically through ingenuity. But when a company grows through mergers and acquisition that can raise a red flag. Historically, there've been fewer challenges to vertical integration up and down the supply chain and across industries. But when AT&T decided it wanted to merge with Time Warner the Department of Justice decided to challenge the move.

Your pricing is going to go out, I don't think it's a good deal for the country.

The companies say they need to make this deal to compete with the Amazons and Apples of the world. The question is whether one huge company plus another huge company would turn into one new enormous telecom and media company controlling so much content and the way it's delivered to you that it could charge consumers more and squeeze out other producers, suppliers, or distributors who want to make you laugh, cry, and binge watch.

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Gale Document Number: GALE|CT535223170