One of the nation’s biggest premium cable programmers suggested in a report Wednesday that a merger of AT&T and Time Warner could create a colossus that would market its own TV offerings first before sending customers to rival networks.
Starz, the pay-cable service that is part of Lionsgate Entertainment, released a report suggesting AT&T might push customers to HBO over competitors like Starz. Starz offers multiple premium-cable services including StarzEncore and Starz Kids & Family, as well as series like “Power” and “American Gods,” and competes directly with Time Warner’s HBO and CBS Corp.’s Showtime. The Starz concern was reported previously by Reuters.
AT&T dismissed the claims. “This conclusion doesn’t square with the facts,” the telecommunications company said in a statement. “We fully expect the Department of Justice to base its analysis on the facts and the law, as it always does, and not the work of HBO’s competitors.” A spokesperson for Starz could not be reached for immediate comment.
AT&T’s proposed purchase of Time Warner has been valued at around $85 billion. The two companies have suggested they believe approval could be near. Time Warner on Wednesday declined to hold a call for investors after releasing its second-quarter earnings report, citing the merger. AT&T has unveiled a new executive structure to be put in place once the deal is consummated.
The Starz study was prepared by Jeffrey Eisenach, an American economist and consultant who has been associated with conservative political organizations, and who was a member of President Trump’s transition team. Eisenach suggested in the report that AT&T would have an incentive to favor HBO over Starz and independent outlets. He suggested AT&T might remove marketing support for Starz or even go so far as to cease offering the service.
“As described in the Eisenach study, a combined AT&T-Time Warner would have the incentive and ability to discriminate against competitors to HBO like Starz and Showtime,”Starz said in a statement. “We hope regulators carefully scrutinize the major consequences of the proposed deal and act as necessary to maintain the robust competition among premium networks that exists today.”
The merger, if approved, will create a media giant that controls not only DirecTV, which AT&T bought previously, but HBO, TBS, TNT, DC Comics, the Warner Brothers studio, CNN, and half of the CW broadcast network, among other assets. President Trump has in earlier remarks said he wanted to block the deal because some media companies have covered his campaign unfairly. Other watchdog groups are wary of the company’s potential new size.