Before AT&T can buy the media giant Time Warner for $85.4 billion, it has to convince Washington that the deal won't harm competition. As part of that effort, AT&T and Time Warner sent U.S. lawmakers a letter on Friday arguing that, if anything, the deal will actually improve the marketplace by allowing AT&T to compete more effectively against other cable providers.
Despite the companies' claims, however, lawmakers opposed to the deal say they are not persuaded that a merger would be in consumers' best interests.
The letter from AT&T and Time Warner was in response to questions from Senate Democrats who said in a letter of their own in January that the merger could "raise prices on consumers, reduce access to independent programming; and harm small businesses, content distributors and innovative new business models."
In its letter, AT&T argued that it would have no incentive to engage in anticompetitive practices, such as excluding other cable firms from accessing Time Warner's content library — a vast trove of programming that includes HBO and Warner Bros. shows and movies. (Cable providers generally pay content fees to air material produced by other programmers.)
"If the combined company withheld programming from cable companies," the letter read, "it would suffer ruinous programming revenue losses.”
Instead, AT&T argued, it plans to incorporate Time Warner's content into its own TV and broadband bundles, "prodding cable companies and other competitors to respond by improving their own services."
The Justice Department is widely expected to review the proposed deal. Other policy analysts say the Federal Communications Commission could play a role, as well. In their letter, the senators worried that AT&T is trying to evade oversight by the FCC, which reviews acquisitions with an eye toward whether a deal benefits the public interest. (The public-interest standard is considered a higher bar than the Justice Department's antitrust standard.)
AT&T has argued that the FCC likely won't have jurisdiction to review the deal, as the merger will not transfer Time Warner's communications licenses from one company to another. In its letter Friday, AT&T also said that Time Warner's "existing license are used for internal communications anyway; they do not provide FCC-regulated services to the public."
"Market realities refute any concerns about anticompetitive effects," AT&T and Time Warner said.
But two of the top signatories of the Senate letter remain unconvinced on Tuesday.
"While I'm glad they responded to me," Sen. Al Franken (D-Minn.) wrote on his Facebook page, "their letter does little to address my concerns and essentially asks American consumers to trust that the combined company won't engage in anticompetitive behavior, raise prices, violate the principles of net neutrality, or decrease access to diverse voices."
Sen. Ed Markey (D-Mass.), who also signed the congressional letter, vowed to keep pressing for opinions other than those "proffered by the companies involved in this deal."
"It’s not surprising that AT&T would claim the proposed deal benefits consumers," Markey said in a statement, "but we need an objective review from the Justice Department and the FCC to truly evaluate how merging two massive companies into one behemoth will benefit my constituents and consumers from coast to coast.”
Franken sits on the Senate Judiciary Committee, and Markey on the Senate Commerce Committee.
President Trump has repeatedly voiced his concern over the AT&T deal, saying it would accumulate too much power in the hands of too few, though he has also conceded to not having "seen any of the facts yet." But analysts believe the acquisition will likely be approved because Trump lacks a direct say in the review process — and, they say, because his administration reflects a generally pro-business stance.