SEC Filings

425
AT&T INC. filed this Form 425 on 12/05/2016
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AT&T/TIME WARNER MERGER DOES NOT RAISE ANTITRUST CONCERNS
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This merger is not about consolidation—either in media or in telecom.  Most mergers that raise antitrust concerns are "horizontal" mergers of competitors in the same line of business.  AT&T and Time Warner are not competitors in any line of business to any meaningful degree.
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Time Warner creates content.  It produces television shows and movies, and owns non-broadcast cable networks, such as TNT, TBS, CNN, and HBO.  Since 2009, Time Warner has NOT owned any cable or internet distribution network.
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AT&T distributes content.  It provides landline telephone service, wireless phone and data service, broadband internet access, and multi-channel video distribution (e.g., DirectTV).
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AT&T/Time Warner is a classic "vertical" merger that does not reduce competition, increase concentration or create market power.  Here, AT&T is buying one of its many suppliers of TV programming.
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Vertical mergers are widely viewed as being pro-competitive because they typically produce efficiencies and other consumer benefits.  That is certainly true here.
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Vertical mergers only rarely raise antitrust concerns—where the combined company would have a dominant market share position at some level of the supply chain that allows it to harm rival companies' ability to compete.
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Neither AT&T, nor Time Warner, has a dominant market share position in any of their separate and non-overlapping lines of business:
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Time Warner:  while Time Warner produces great TV shows and movies, and has some popular networks, our studio produces only a small fraction of TV shows and movies, and our networks represent an even smaller fraction of video watched by consumers.
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AT&T: the wireless business is intensely competitive, and AT&T is an insurgent in both broadband and multi-channel video distribution, where incumbent cable companies hold traditionally stronger market position.
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The combined company will have no ability or incentive to harm competition in any market or at any level or area of distribution.  The value of Time Warner's business depends on distributing that content broadly, through a wide range of traditional and online distributors, platforms and devices.
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