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AT&T Time Warner Merger Could Kill the Skinny Bundle

Skinny bundle, we hardly knew ya: AT&T’s plan to acquire Time Warner will likely spoil efforts to sell consumers smaller and cheaper TV subscriptions.

Some consumers have long advocated for the ability to buy TV channels a la carte, or at least get more flexibility to not pay for some of the networks they don’t watch. The latter idea has gotten some traction in the industry under the “skinny bundle” moniker, with TV providers arguing that they could slow the growth of cord-cutting if they’d be able to sell consumers cheaper alternatives to the $100 cable bundle.

Some TV providers have started to experiment with various forms of skinny bundles, often offering consumers access to local broadcast channels like ABC, CBS and NBC, plus a limited line-up of basic cable channels, and the option to add HBO for half the price of their typical cable bundle.

Dish’s Sling TV has taken the idea one step further, and is actually offering small network TV bundles over the internet for as little as $20 a month. Many others, including Google’s YouTube, have looked to also go skinny. Hulu, which plans to launch a live TV streaming service next year, has yet to reveal how skinny it wants that service to be. (Coincidentally, Time Warner does own 10 percent of Hulu.)

There’s only one problem with these cheaper plans: TV networks don’t like them. Media companies like Viacom and Disney would prefer to keep selling their networks the way they have always done — with a take-it or leave-it approach that forces operators to sell a dozen little-watched channels in order to get the one or two that consumers care about.

Skinny bundles have long been a point of contention between operators and TV networks. In fact, Disney even took Verizon to court over the operators attempts to sell cheap TV plans without ESPN. Verizon CEO blamed the TV networks for not being able to sell skinnier bundles during a recent appearance at the Internet Association’s Virtuous Cycle conference, saying that the company “would sell skinny bundles exclusively” if it could.

Not all operators are that obsessed with trimming the fat. AT&T, for its part, isn’t looking to go skinny when it starts selling its DirecTV Now streaming service later this year, and AT&T’s SVP of strategy and business development Tony Goncalves told Variety earlier this year that he doesn’t think skinny bundles are going to last. “Skinny will turn to fat sooner or later,” he said, arguing that the economics for skinny bundles simply don’t work.

By acquiring Time Warner, it’s all but certain that AT&T won’t change its mind on this point, and continue to advocate for big bundles. In fact, it could lead to a kind of power shift in the industry.

Comcast already owns NBC Universal, a marriage that has effectively turned the TV operator into a media company that also owns the pipes for its content, and has little interest in others disrupting either of those two businesses. AT&T’s acquisition of Time Warner would likely lead to a similar transformation — and in turn make it harder for anyone trying to chip away on the status quo.

In other words: As media companies are getting bigger, chances are fizzling that consumer’s TV service bills are going to get smaller.

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