AT&T CEO Defends Time Warner Deal Before Senate Antitrust Panel

AT&T CEO Randall Stephenson will try to sell Capitol Hill on his company's planned merger with Time-Warner. Stephenson will present the merger as a way of disrupting the existing cable TV model, but with the president-elect already lined up with opponents, he may have an uphill climb.

ARI SHAPIRO, HOST:

The CEOs of AT&T and Time Warner were on Capitol Hill today defending their proposed $85 billion merger before a Senate antitrust panel. Republicans for the most part were sympathetic to the idea that the merger might benefit consumers - Democrats not so much. They were skeptical that the country needs another big media merger. NPR's Yuki Noguchi reports.

YUKI NOGUCHI, BYLINE: Republican Michael Lee of Utah opened the hearing laying out his concerns.

(SOUNDBITE OF ARCHIVED RECORDING)

MICHAEL LEE: The potential anticompetitive favoritism that the combined firm could bestow on its own products is not limited to price or access but extends to the quality of the offerings as well.

NOGUCHI: In other words, could an AT&T abuse its power if it controls both the airwaves and the movies and shows people want to see? In response, AT&T CEO Randall Stephenson cast a consumer-friendly spin.

(SOUNDBITE OF ARCHIVED RECORDING)

RANDALL STEPHENSON: We want to get the most content to the most people at the lowest prices, and we want consumers to pay for their content once and then watch it anywhere at any time.

NOGUCHI: Stephenson promised more innovation and lower prices. He had an ally in media investor Mark Cuban who told the panel that AT&T and Time Warner now face competition for eyeballs and advertisers from Google, Facebook, Amazon and Apple.

(SOUNDBITE OF ARCHIVED RECORDING)

MARK CUBAN: Alone, it will be very difficult if not impossible for either to compete with the companies I mentioned. Together, it will still be difficult, but they will have a chance to battle the dominant players and increase consumer choice and competition for consumer attention.

NOGUCHI: But not everyone agrees with that view of the market. Gene Kimmelman is CEO for consumer advocacy group Public Knowledge.

(SOUNDBITE OF ARCHIVED RECORDING)

GENE KIMMELMAN: I appreciate Mr. Cuban's points, but the last time I looked, Google and Facebook weren't charging me more than $200 a month to get those apps, to get their content.

NOGUCHI: He noted similar deals between Comcast and NBCUniversal and AT&T and DirecTV have not resulted in price decreases. In fact, Kimmelman's group estimates pay-TV consumers are overcharged about $45 a month. The worry is that a combined company would charge consumers or its cable rivals more to access content. Time Warner CEO Jeff Bewkes said increasing paywalls would in fact backfire with movie and show producers.

(SOUNDBITE OF ARCHIVED RECORDING)

JEFF BEWKES: They come to us because we have the resources and the distribution reach to put their product in every home. If we didn't have that, we wouldn't be able to get the next hit show, the next hit movie.

NOGUCHI: Minnesota Democrat Al Franken, himself a former "Saturday Night Live" cast member, disagreed.

(SOUNDBITE OF ARCHIVED RECORDING)

AL FRANKEN: No, I don't think that's why talent went to HBO.

NOGUCHI: It's the opposite, Franken said. HBO succeeded because consumers wanted its content enough to pay extra for it. And couldn't AT&T block Time Warner content from rival cable operators, hurting those consumers? To which Stephenson responded...

(SOUNDBITE OF ARCHIVED RECORDING)

STEPHENSON: No because we don't have the market power to do something like that either at AT&T or at HBO.

NOGUCHI: The big unknown remains where President-elect Donald Trump falls on the issue. During the campaign, he vowed to block the deal but has not weighed in since. Yuki Noguchi, NPR News, Washington.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.