A proposed $85.4 billion merger between Dallas-based AT&T and Time Warner drew the ire of Donald Trump and Bernie Sanders during the 2016 presidential campaign, and the CEOs of both companies sparred with lawmakers on Capitol Hill on Wednesday over the deal.
AT&T, the largest telecommunications company in the world by revenue, announced in October its intention to buy Time Warner, the world’s third-largest entertainment company.
AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes, along with Dallas Mavericks owner and billionaire Mark Cuban, defended the merger on Capitol Hill, arguing the merger allows AT&T to compete with tech behemoths such as Google, Apple, Facebook and Amazon.
“Neither is in any sort of dominant position by themselves,” Cuban testified. “We need more companies to compete with Apple, Google, Microsoft, Amazon and Facebook.
“Alone, it will be very difficult, if not impossible, to compete with the companies I mentioned,” he continued. “Each of the largest content companies present content algorithmically; at least with Time Warner and AT&T we get to pick the content we want.”
Cuban was one of the pioneers of broadcasting content on the web, a key component of the potential merger between AT&T and Time Warner. He founded broadcast.com, a web-streaming service intended to broadcast Indiana Hoosier basketball and acquired by Yahoo in 1998 for $5.7 billion in stock.
Democratic Sens. Al Franken and Amy Klobuchar, both of Minnesota, and Richard Blumenthal of Connecticut questioned the merger’s merits. They raised concerns that Time Warner’s content could be distributed exclusively to AT&T customers, which would limit options for consumers and potentially raise prices.
“When you have these hearings, you get stuff on the record,” Klobuchar said in an interview after the hearing. “They said on the record that Time Warner wouldn’t discriminate where the content went. They said on the record that they hoped prices would go down.”
The ultimate decision over whether to green-light the mega merger lies with the Department of Justice and potentially the Federal Communications Commission, which could choose to review the deal.
“It’s not a matter of what I prefer. It’s a matter of whether we assume the licenses or not,” Stephenson said as he left the hearing room. “It’s a matter of law.”
In 2015, Comcast called off a potential merger with Time Warner after the Department of Justice began to file an anti-trust lawsuit over the deal.
Franken and Klobuchar are concerned with potential costs of the deal for consumers.
“You can have deals that help consumers, deals that don’t and this one is very complicated in terms of where that outcome is,” Klobuchar said.
But Blumenthal went a step further, questioning President-elect Trump’s threats of blocking the merger based on CNN’s coverage of him. CNN is owned by Time Warner.
“To threaten more vigorous or adverse enforcement against a particular company because he doesn’t like the news coverage is a threat to the First Amendment,” Blumenthal said. He added that while he likes Trump’s interest in anti-trust issues, he is worried that the president-elect’s interest comes solely from wanting to control media coverage.
Both Stephenson and Bewkes said Trump’s statements will have no impact on CNN’s coverage.
“I want to get back to the merger,” North Carolina Republican Sen. Thom Tillis said after Blumenthal’s remarks, drawing laughter from his fellow Republicans.
In general, Republicans are less skeptical of the merger, although Antitrust, Competition Policy and Consumer Rights Subcommittee chairman Mike Lee, R-Utah, asked pointed questions about potential conditions that could be placed on the merger by the DOJ and FCC.
“When Comcast and others put conditions in place to guarantee they would have access, shouldn’t we be concerned about the possibility that any conditions we put in place here might now be followed?” Lee asked.
Cuban was relatively subdued during the hearing, but when asked about the president-elect after the hearing he pulled out a typical rhetorical burst and likened Trump to a first-round NBA draft pick.
“Donald Trump is our No. 1 draft pick,” Cuban said. “He’s the No. 1 pick, he’s who we put our hopes and dreams with and we’re going to believe in him. Right now it’s a little bit easier because we haven’t played a game yet. There’s no reason to rush to judgment or come to any conclusions.”
Cuban was a noted critic of Trump during the campaign, calling the president-elect “lazy” in July.
“Let’s see what happens on Jan. 21 and then we’ll go from there,” Cuban said. “I hope he’s a superstar and I hope everything turns out the way we all hope it will.”