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Why the AT&T Merger May Suck For Us

Why the AT&T Merger May Suck For Us

It’s official: AT&T is set to acquire Time Warner in a massive deal that’s being spun as a mutually beneficial merger that will, in the end, benefit consumers. From the official release: “AT&T Inc. (NYSE:T) and Time Warner Inc. (NYSE:TWX) today announced they have entered into a definitive agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share. The agreement has been approved unanimously by the boards of directors of both companies.”

The total transaction is valued at $108.7 billion, including the acquisition of Time Warner’s net debt. The purchase price is valued at $85.4 billion and $40 billion of that will be paid by AT&T with cash. “The cash portion of the purchase price will be financed with new debt and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for an unsecured bridge term facility for $40 billion.”

So what does all of this mean for you and for me as average consumers? For their part, Time Warner and AT&T are selling this as a merger that will benefit the consumer and drive innovation. AT&T CEO Randal Stephenson said that customers are demanding access to more entertainment on mobile devices, and that this deal will result in premium programming being offered in more ways than ever before – and at competitive prices.

Pricing for services is something we’re a bit worried about. Considering the results of the NBC Universal and Comcast merger, lower costs aren’t something we actually expect to see for streaming services. Make no mistake, though, AT&T will try its damndest to steer you away from Xfinity and traditional cable providers with its own alternatives. One of those alternatives will be DirecTV Now, a “cord-cutting” streaming service announced earlier in the year, due to launch soon.

Consumers should note, however, that this will result in AT&T acquiring HBO, DC, Cartoon Network, Warner Bros., and more. This is probably great news for AT&T and DirecTV customers, but for the rest of us there’s always a chance that AT&T makes moves in the future to make it harder for non-customers to get a hold of some of that premium content – including, but not limited to – Harry Potter films, DC Comics films, NBA coverage, Game of Thrones, streaming services for Cartoon Network and HBO, and more.

We also have to keep in mind that this will mean Warner Bros. and Adult Swim games could very well end up being made not with gamers and fans in mind, but with shareholders in mind. This could mean the end of genre-defining classics like Arkham Asylum in favor of more lifeless “designed-by-committee” projects developed with no other intention other than to hit sales goals. On the flip-side, maybe we’ll see some brand new Batman shows with the polish and appeal of the MCU spin-offs on Netflix. That’d be nice, but only for AT&T customers, as that type of programming would absolutely become a DirecTV Now exclusive.

Why the AT&T Merger May Suck For Us

While the average consumer is still working out how this deal might affect them, investors and politicians remain skeptical, if not outright suspicious. Both presidential candidates have said that they will look very closely at the deal, and Donald Trump mentioned that he opposes it altogether. “As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” he said in a speech in Gettysburg, Pennsylvania (via CBS ). Trump’s senior economic adviser stated that it’s their duty to break up the “media conglomerate oligopolies” that have been steadily taking control of the media and dissemination of information.

Where do you stand on the acquisition? Is this deal going to drive competition and innovation, or is this going to give AT&T way too much power? Should AT&T have anything to do with Batman and DC Comics? Are you concerned about the aftermath for non AT&T customers in 2017? Let us know what you think about the deal in the comments below.

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