Starz Claims AT&T’s Acquisition Of Time Warner Would Harm Independent Channels

Starz, a premium movie channel, has criticized the plan by AT&T to acquire Time Warner saying this would result in the telecoms giant steering customers to its premium channels and away from those that Starz owns. In the $85 billion acquisition deal, AT&T would take ownership of coveted media properties belonging to Time Warner such as Warner Bros film studios, Cable News Network, HBO and several others.

A study commissioned by the Lions Gate Entertainment unit found that in the event that the acquisition of Time Warner by AT&T is approved, the telecommunications giant would likely lure customers towards HBO instead of Starz or other independent channels. The study was conducted by Jeffrey Eisenach, an economist. Some of Starz’s most popular shows includes Outlander and American Gods.

Marketing support

According to Eisenach, one of the ways the telecommunications giant could lure customers away from Starz and to its own media properties would be by withdrawing marketing support for the independent channel making signing up customers harder. Alternatively, AT&T could drop the independent channel altogether.

The Eisenach study, however, refrained from taking a stand on whether the U.S. Department of Justice should impose conditions on the deal or refuse to give approval. In a statement Starz urged regulators to undertake a careful scrutiny and consider the proposed deal’s major consequences. The independent channel also urged the regulators to be guided by a desire of maintaining healthy competition in the market.

Study objections

AT&T did not, however, agree with the conclusions of the study that stated that it would abuse its power by strangling Starz and other independent channels.

“This conclusion doesn’t square with the facts. We fully expect the DOJ (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,” said a spokesperson for AT&T in an emailed statement.

Last year while on the campaign trail the current president of the United States, Donald Trump, poured criticism on the deal and promised that his administration would not approve of AT&T’s acquisition of Time Warner. Jeffrey Eisenach was a Trump transition team member. Besides Trump, Democrats have also been against the deal based on the argument that if approved it would harm content providers and consumers.

Currently AT&T is the biggest U.S. MVPD – Multichannel Video Programming Distributor, as it controls 25.8% of the market in the United States. Comcast comes in second with a 23.2% share of the market while Spectrum is third with a 17.7% market share.

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