While most of America is focusing on choosing either which meme they thought was the funniest of the day, or which demonic figurehead they want to sit in the White House next year, AT&T — along with Time Warner — decided to shake things up in the global economy in a big way.
Recently announcing their plans to merge – thereby becoming a mega-giant in the field of media and communication – the two business leaders are facing backlash from the power-hungry regulators on Capitol Hill.
Naturally, Congress gets antsy when it comes to big-time mergers, especially when deals close in on $100 billion. We saw horrible credit problems and an economic collapse due to financial intermediaries unifying and taking on horrible loan portfolios, insisting that benefits would come to the customers.
Many argue that no benefits will come with this merger, and people will see their programming choices reduce and prices rise as a result of less competition.
This is what most regulators worry about. They have the consumer’s preferences in mind.
Such a merger involves a vast takeover of market power. This means the party obtaining such privilege now has greater means of regulating their prices while they provide a good that other companies can’t compete with, due to their lack of financial resources and assets.
In the case of AT&T, their plans can be viewed as an exemplar of a vertical acquisition. Time-Warner is a provider of programming while AT&T, with smart phones and internet services, can use this programming on their devices as they please.
AT&T could muscle out rivals such as Verizon by owning the likes of HBO, which airs top-quality programs by providing a better-quality HBO service to AT&T users.
With the potential pitfalls in mind, a closer look may provide reason as to why the merger will benefit the market and consumers alike.
With the smart-phone industry innovating at the rate it is, it’s apparent that mobile devices and television are becoming increasingly unified.
To respond to such a change in the market, it’s fair to say that this merger is wise from a business vantage point. AT&T will now be at the forefront of innovation. They, along with Time Warner, are two of the most time tested innovators in the past 100 years, so one can only respect the deal.
Moreover, the consumers may have less to worry about than regulators are complaining about. With economies of scale and scope in the hands of the two businesses, they will be able to provide everything for less money in the long run as fixed costs will diminish and the two companies consolidate.
With the money sure to be rolling into their bank accounts, TV-watchers should expect well-funded programming to hit the airwaves, especially on the already well-financed HBO.
Additionally, it may be interesting to see how TV moves from the wired boxes in our living rooms to predominately wireless devices, something sure to happen in the next 20 years, regardless.
Other companies will surely follow suit with their own ideas, and competition will resume.
It is this type of innovation that inspires America. People like seeing new ideas and technological development. It gives them something to be proud of as Americans. Many of us need such inspiration now more than ever.
However, Republican presidential nominee Donald Trump, who has garnered the support of around 40 percent of America, has vowed to destroy the deal saying it gives “too much power in the hands of too few.”
Seems hypocritical when reviewing his business practices and acquisitions of some of the “finest real-estate in the entire world.”
Trump will be faced with GOP opposition on the matter, as Republicans are notorious for being more relaxed on mergers of such magnitude.
Hillary, who has said practically nothing on the matter, is likely to actually agree with Trump. She’s been insistent on the continuation of anti-trust laws that breakup industry power hoarders for the good of the consumers.
It all sounds wonderful, that consumers are protected from the mean, old business giants that will stifle them and steal their money, but who are we kidding?
Why would we trust the government, whose approval rating is abysmal, with major financial decisions that may make my smart phone more useful?
Since the financial collapse in 2007, the government has invested far too much effort and money in deregulation efforts, some of which are untested ideologies that aim to keep the market away from financial tension.
When it comes to my television experience, I’m not worried about AT&T getting stronger and maybe even cutting my family data plan costs as a result.
Let the company innovate.
