Pedestrians walk past a Time Warner Cable customer service center in New York in this February 13, 2014 file photo.JOSHUA PACE/Reuters
AT&T Inc. chief executive officer Randall Stephenson told Congress his company's planned $85.4-billion (U.S.) purchase of HBO and CNN owner Time Warner Inc. will help the telecommunications provider challenge cable companies for customers.
The deal also may hasten AT&T's development of faster 5G wireless service to deliver its newly acquired video content, Mr. Stephenson said in testimony submitted to the U.S. Senate Judiciary antitrust subcommittee for a hearing Wednesday.
"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models," said Mr. Stephenson, whose company serves 133 million U.S. wireless customers and 25 million video subscribers. Consumers want to "watch their favourite video content anytime, anywhere," he said.
Time Warner chief executive officer Jeffrey Bewkes said in his submitted testimony that the combination will allow faster moves toward new channel packages delivered over the internet.
The deal needs to be carefully reviewed and possibly blocked because it poses a danger of harming competition, leading to higher costs and fewer choices for video services, Gene Kimmelman, a former antitrust regulator who is president of the policy group Public Knowledge, said in submitted testimony.
The hearing could be a "tea leaf for other mergers" as Washington anticipates the administration of U.S. president-elect Donald Trump, Paul Gallant, a Washington-based analyst with Cowen & Co., said in a note Tuesday. Congress doesn't decide mergers but it can set the tone for the regulatory agencies, he said.
"There is now widespread discussion of how a Trump Administration could be more open to various deals among wireless, cable and content companies," Gallant said. "Tomorrow's hearing is only about AT&T-Time Warner, but it could provide clues about Congress's attitude toward telecom/media consolidation more generally."
Leaders of the antitrust subcommittee – Senators Mike Lee, a Utah Republican and Amy Klobuchar, a Minnesota Democrat – said in an Oct. 23 statement the acquisition "would potentially raise significant antitrust issues." They called the hearing scheduled for Wednesday morning in Washington.
The transaction announced Oct. 22 will be reviewed by the Justice Department, according to the companies, and possibly by the Federal Communications Commission. Trump said during the campaign he would block the merger if he became president, but he hasn't weighed in since.
The U.S. review of the deal should be straightforward, and the companies will probably have to make some concessions, Mr. Stephenson told investors Tuesday. After his talk, Stephenson said in a brief interview that he hasn't met with Trump.