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Wednesday, June 13, 2018

Finally hugged Time Warner and AT&T

Por qubano22005

The mystery had an end. A federal judge has already determined that the two giants of telecommunications in the United States, AT&T and Time Warner, will be able to operate without the government being able to accuse them of monopoly and damage competition. With his decision, federal district judge Richard Leon ended the largest trial in years where a competition case was settled. The ruling authorizes the agreement valued at around 85,000 million dollars, one of the largest in the media so far. Analysts believe that with this merger both titans of telecommunications will be able to develop new business models for the market.

Judge Leon's decision in court could change the consumption pattern not only of television and its services, but also the market, by joining the two biggest competitors. Therefore, the rest of the telecommunication companies will have to draw alternative strategies to stay afloat to face the business titan in which both companies will become.

At the moment, the telephony giant AT&T owns the important news network CNN, HBO, Warner Bros. Studios and the very popular Game of Thrones franchise. In addition, it will impose respect in the market of sports programms, a fact that will undoubtedly cause real chaos and headaches among competitors.

Meanwhile, the streaming television market will be another sector in which the new merger will have consequences. Recall that AT&T is the largest provider of telecommunications services in the United States, so television and service content for American consumers would be, to a large extent, subject to the designs of the mega company.

And it is not a mere hypothesis. If the panorama that is approaching in the world of info-communications is analyzed, this symbiosis is as promising as the fact that Neil Armstrong walked on the Moon. There are multiple reasons to assert this argument.

First of all, this is the information society era. A large percentage of the current world population consumes most of the content streaming through mobile devices, through tablets and smartphones. Therefore, this company will become a channel for consumers, who now spend more time connected than watching TV. AT&T is also securing the potential market for the future 5G implementation, a connectivity that will allow downloading large volumes of audiovisual content in a few minutes.

The new mega company will have what it takes to cover most of the market. That is infrastructure provided by AT&T and all-kind contents from informative to entertainment by the hands of Time Warner.

Now, the fact would cause that emerging companies like NETFLIX and other consolidated ones such as Google or Facebook are in danger since AT&T and Time Warner have enough to create competing platforms that unseat these technological companies that have already ventured into the audiovisual content market via internet.

Víctor Pavón-Villamayor, executive chairman of Oxford Competition Economics, says that companies want to go from being only economic agents that conduct communications from one part to another, to be platforms that also provide content under the logic of a more digital platform.

Another issue is the fact that if the government does not file an appeal and the merger becomes effective, other telecommunication and content providers could be "emboldened" to give themselves a "fraternal embrace". It would not be unreasonable to think Sprint associated with Netflix or Spofity, just to mention some examples.

In fact, similar cases are already being handled in the industry such as CVS Healt Corp and Aetna for 69,000 million dollars, and Comcast to the conquest of 21st Century Fox, a purchase they had given up precisely because of regulations. Meanwhile, Verizon, Dish and T-Mobile and Sprint will be tempted to buy or ally with content generators. Without doubt television companies will see in mergers with telecommunications providers in the near future their survival in the new era of information consumption.

The Department of Justice of the United States opposes to that because such association could raise the prices of acquisition of the contents. It could also redefine the market in the companies’ favor and against free competition and the final consumer. Donald Trump, who has wanted to block the agreement since he heard about it, is once again handcuffed by the "too much concentration of power in the hands of only very few."