The internet television streaming service market is also currently booming. Consumers now have more choice and flexibility than ever before. Along with AT&T’s DirecTV Now, there are well-funded other offerings such as Google’s YouTube TV, Dish Network’s Sling TV, Sony’s PlayStation Vue and Hulu Live TV in the marketplace.
In addition, Disney announced plans in August to launch a branded direct-to-consumer streaming service in 2019 and an ESPN streaming service in 2018.
“You could not have a more vibrant competitive landscape than we have today and if anything this merger is going to cause people’s cable bills or their TV bills to go down,” AT&T outside counsel Dan Petrocelli told CNBC on Tuesday.
In fact, AT&T may be pursuing the deal from a position of weakness not strength. CEO Randall Stephenson described the competitive threat from the internet giants during the company’s press conference Monday.
“Massive large-scale internet companies with market caps in the hundreds of billions of dollars are creating tons of original content and distributing it directly to the consumer. This is disrupting both industries, media and as well as the communications industry.”
He cited how Netflix has more than 100 million subscribers and Amazon has an estimated 60 million Prime members. In addition, Stephenson noted Google and Facebook are now reaching billions of users.
In comparison the DOJ cited how AT&T has more than 25 million video subscribers across its television services in its lawsuit.
Even legendary cable industry deal-maker John Malone said his industry would not be able to catch up to Netflix due to the company’s lead in size and large subscriber base.
The internet “makes scale even more important in the media business, where scale always was important. It’s all about scale,” he said on Nov. 16. The billionaire investor noted the cable industry missed its opportunity to compete with Netflix in the past and said “it’s way too late” now.
DOJ also seems to overstate the competitive moat for Time Warner’s businesses.
Is “Game of Thrones” that different than what Netflix has been able to create with its original content offerings? No.
Does TBS have an irreplaceable advantage in its live sports offerings when Amazon, Facebook and Google are now bidding for the sports broadcasting rights with their massive balance sheets and distribution platforms? No.
The government should look at the stock market’s verdict on where the power resides and not risk interfering with the free-market’s competitive dynamics.
AT&T stock has declined 19 percent year to date through Monday, while Time Warner shares have fallen 9 percent. The S&P 500 is up 15 percent in the same time period.
In contrast, Amazon, Facebook, Alphabet and Netflix shares are up 50 percent, up 55 percent, up 31 percent and up 57 percent, respectively.