Giant Corporations Keep Winning
What do you do if you don’t like your cable service? Or if your Internet Service Provider (ISP) just raised your bill an unconscionable amount? Or has blocked your favorite series or wants to charge you extra to watch it?
Don’t bother complaining to any branch of the federal government, which seem perfectly happy giving free rein to large corporations, while ignoring the needs of the average consumer.
The latest case in point: A federal judge last week allowed AT&T to complete its merger with Time Warner, further narrowing consumer choice or control on a wide range of entertainment and telecommunications services. AT&T thus obtains such popular programming as HBO, CNN, TBS, TNT, the Warner Bros. movie studio, and DC Comics, along with shows like Game of Thrones and the Harry Potter movie franchise.
The ruling represented a rare loss for the Trump administration which had opposed the merger. President Trump viewed the proposed merger as a win for CNN, a network he sees as having been unfair in its coverage of him, so the anti-trust division of the Department of Justice (DOJ) sued to stop it. In his ruling, federal judge Richard Leon said the Justice Department had failed to demonstrate that the deal would harm either consumers or competition.
He also warned the DOJ not to seek a stay of his order because the two companies had to complete the deal by this Thursday, June 20, or pay a $500 million fine. Such an action, he said, would be “manifestly unjust” to the two companies and their shareholders.
“The consumer just doesn’t benefit in any way, shape or form [from this merger],” Gigi Sohn, a former top aide to the Federal Communications Commission, told The Washington Post. “I believe this is going to lead to higher prices. Already, with their cable systems, they control what people see and hear. Now they can do the same on broadband . . . [and] favor their Time Warner programming.”
That’s because this comes on the heels of the demise of net neutrality this month, the concept that ISPs must provide all content impartially, whether they have a financial stake in it or not.
Former Federal Communications Commission (FCC) commissioner Michael Copps said in a statement: “With the recent repeal of net neutrality, AT&T now has the ability to block or throttle any online content that competes with Time Warner programming. The decision to approve the AT&T/Time Warner merger further entrenches AT&T as a media gatekeeper that harms the public interest and opens the door for more media consolidation in the future.”
Anticipating the Merger
How true. This spring, in anticipation of this merger, CNN Money noted that “CVS announced it was buying Aetna, Disney said it would buy Fox, and Cigna sought to buy Express Scripts. . . . CVS already controls the sale and insurance of prescription drugs, and buying Aetna would give it power over how they are prescribed by a network of doctors. Disney, the largest movie studio, would control 21st Century Fox. The fourth-largest health insurer, Cigna, would own the largest prescription benefits manager, Express Scripts.”
And this financial version of Pac-Man only gets worse. “Comcast is widely expected to bid within days for part of 21st Century Fox,” the network reported last week. “That would set up a showdown with Disney, which has already put in a bid for those assets. Fox stock jumped more than 6 percent in after-hours trading following [Judge Leon’s] ruling.”
All these firms argue they need to merge to provide “economies of scale” to hold down prices and foster innovation. That means they can eliminate duplicative functions to save money. In other words, they can have one human resources (HR) department, for example, overseeing all HR functions for both companies.
What Happens Now?
Besides laying off the affected personnel, however, what this means in practice is that if customers (or prospective employees) have a problem with the practices, offerings, or prices of a given company, they have fewer alternatives to turn to. Corporations, however, seem quite pleased with the decision, if the stock market response is any indication. Time Warner shares were up nearly five percent in the hours following the decision, as was 21st Century Fox.
Kara Alaimo, an assistant professor of public relations at Hofstra University, writing on CNN’s website, predicted that the merger will allow these “behemoth companies” to increase prices, decrease customer service, and discourage smaller start-ups, which will not have the financial resources to compete against the big guys.
“Entrepreneurship in the United States hit a 40-year-low,” Alaimo said in 2016. “In fact, economists say that the reason the United States hasn’t been experiencing more economic expansion or wage growth, despite falling unemployment and a booming stock market, is that fewer new businesses are being created.”
There is little chance the ruling will be overturned, so stand by as prices increase for just about every technology-related service you use. Billshark will continue to inform you of news that impacts your wallet. And if you’d like a small measure of revenge, let us review your bills and find ways some of these giant corporations are overcharging you. We could find you hundreds or thousands of dollars in savings.