
AT&T promised lower prices after Time Warner merger, but it’s raising them - hiimnate
https://arstechnica.com/information-technology/2018/07/att-promised-lower-prices-after-time-warner-merger-its-raising-them-instead/
======
kevin_b_er
Whenever a corporation says a merger will result in lower prices, they're
usually lying, because mergers increase prices.

[https://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?ref...](https://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1857&context=californialawreview)

~~~
smt88
Even if a merger allowed a company to lower prices through cost reductions,
they still wouldn't because they own more of the market and have less
incentive to compete.

The only exception I've ever heard of is Amazon's purchase of Whole Foods, but
you could argue that Amazon wasn't competing much with Whole Foods before it
purchased them.

------
rayiner
Brodkin's article takes the relevant "promise" quite out of context:
[https://www.courtlistener.com/recap/gov.uscourts.dcd.191339/...](https://www.courtlistener.com/recap/gov.uscourts.dcd.191339/gov.uscourts.dcd.191339.121.0_1.pdf)
(see page 1).

The full quotation is:

> As to its price-increase theory, _the government_ itself conceded that the
> merger would cause prices to go down for millions of AT&T customers
> nationwide. The _government’s own “bargaining model” likewise showed a price
> decrease_ for all consumers, once the correct data were employed. And the
> government’s own economic expert effectively repudiated its other two
> theories of likely harm. The government, in short, gave the Court no basis
> for finding that this merger is likely to reduce competition at all, much
> less substantially. Rather, the evidence overwhelmingly showed that this
> merger is likely to enhance competition substantially, because it will
> enable the merged company to reduce prices, offer innovative video products,
> and compete more effectively against the increasingly powerful, vertically
> integrated “FAANG” companies.

The brief was addressing the predictions of the economic model _the DOJ
offered_ in opposing the merger. Nowhere did AT&T, as Brodkin misleadingly
suggests, "promise" to "lower prices" (or that no specific rate would never go
up). Of course, that all makes sense. AT&T _had no reason_ to make such
promises. In blocking a merger, the burden of proof is on the DOJ. They have
to show consumer harm; the merger company has no burden to show consumer
benefits. Why would AT&T go out on a limb and make promises it has no reason
to make?

Moreover, the brief addresses the government's arguments for blocking AT&T's
merger with Time Warner, which has nothing to do with the price of DirecTV:

> The government’s central prediction of harm rests on the premise that AT&T
> would use Time Warner’s Turner content as a “weapon” against rival
> distributors by threatening to withhold it during bargaining, thereby
> forcing them to pay higher prices.

The subject of the briefing was prices for _content distribution_. Prices for
_DirecTV_ \--what Brodkin points to--have nothing to do with that.

~~~
dfee
This kind of crap is why I dropped ArsTechnica from my RSS feed after 11
years.

~~~
ocdtrekkie
Ars is _on whole_ still quite good, but there are some heavy biases on the
part of some of their writers, and I don't think Ars' editorial staff keeps
them in check. I did actually subscribe to Ars' $25 a year plan that gives you
full text RSS, but I almost didn't because of Jon Brodkin's crud alone.

------
arthurofbabylon
This is a great opportunity to educate our less-technically-minded civilians
on the pitfalls of large, unaccountable corporations, and the benefits of
anti-trust enforcement... It's easy for the mainstream to understand how this
particular monopolization negatively impacts all of our bottomline.

~~~
extralego
My parents love talking about how bad monopolies are. They are well aware and
it’s useless because they keep voting for the same people.

~~~
pascalxus
That's what happens when you only have two choices to vote for.

~~~
mikekchar
You don't just have two choices to vote for. You have a system where
candidates are chosen in a vote by proxy, meaning that there are a few
powerful people in each party who negotiate to decide what candidates are
going to run for election. Not only that, but many states are highly polarised
meaning that if you are a politician and you want to win the election, you may
be highly encouraged to run for the dominant party in your area. What this
comes down to is that there are a few powerful people who negotiate about who
is going to run, and in many cases who is likely to win. I suspect this is why
the media in the US takes a highly polarising stance on politics -- because
this suits the people in power.

It's even worse when you consider the presidential elections, though. In that
case, there are only 2 sets of candidates to deal with. If you had enough
money/influence to spend, how difficult would it be to make sure that the
candidates for _both_ parties were selected to be sympathetic to your cause?
Or if you can't do that, make sure that the match up in the election is in
your favour.

A lot of people on HN have at least some experience with security on computer
system. We've seen how people will search for the slightest vulnerability and
leverage it to get an advantage. When you look at the electoral system, it's
completely insane how vulnerable it is. And with so much money on the line, it
would be completely unrealistic to imagine that it's not already completely
compromised.

Having said that, I'm not really intending this to be a rant against the US
electoral system only. Some systems in the world are slightly better IMHO, but
only slightly. Given that the system is likely to be compromised already and
the system is only changeable within that compromised structure, I think there
is little one can do. Lately I think it's better to act _outside_ of the
system. If you want something done, then don't _vote_ for it. You need to get
off your bum and actually _do_ it. This is a problem (especially for me!)
because most people (including myself) feel like the situation is "good
enough" that it's not worth getting involved. However, I encourage people who
are more motivated than me to trying to do good with their own 2 hands instead
of encouraging them to vote for the "right" person.

------
glitcher
I'm more surprised that such a "promise" is given any credibility in court to
begin with. I'm not familiar with the law, but from my naive understanding a
company can basically decide to change their pricing however/whenever they
want. So how does stating to a judge that they _might_ have an opportunity to
lower prices at some point in the unknown future translate into any kind of
legal obligation to do so? To me it just sounds like an empty promise that got
them through the court proceedings, and in no way affected their behavior
afterwards because why would it?

------
Waterluvian
Merging feels like a form of collusion.

I have a service. You have a service. Let's combine them to eliminate
competition between us and make both of us richer with higher prices.

~~~
tyfon
It is also almost always bad for shareholders when companies are merged.

Let's say there are two competing companies, I could myself as an investor
chose where to put my money, in one or the other or both. When they merge I
lose the ability to place my money how I see fit.

As my professor/dean in financial economics said: If you get to vote on a
merger, always vote no!

~~~
drcode
This seems to assume that the conjoined entity is exactly equivalent in terms
of efficiency and market power to the previous two separate entities- That's a
pretty radical assumption and it seems you'd have to give some evidence to
explain why this would be the case.

~~~
tyfon
I don't have any evidence other than anecdotal and theories.

I used to work in a bank that merged with another and the amount of
inefficiencies, double teams/management and general disgruntlement was
staggering. I left and so did most of the ones capable of finding new jobs.
The ones that stayed behind were not the highest performers.

Another one is from macro economics. When two companies compete they tend to
be very efficient but when they merge they have no more incentives to compete
to attract customers. The result is higher prices to customers and lower
effectiveness. Imagine what would happen if Intel bough AMD.

But the main issue is that I want to manage my investments myself and not let
the companies manage it for me by merging.

------
hardtke
The three largest OTT providers (Sling, YouTube TV and DirectTV Now) all
raised their prices by $5 recently. This seems similar to how airlines all
manage to raise their fares at the same time without explicit coordination
(one airline does it, and the others quickly match). I don't think it has
anything to do with the merger.

~~~
indigodaddy
The way I look at this DTVN price hike, is that my HBO add-on went from $5 to
$10/mo. Still a good from my perspective...

------
tempfs
AT&T carries directly or peers with basically every other major internet
carrier in the country.

This makes them defacto critical national security infrastructure and thus
completely immune to the kind of recourse and accountability that all
corporations should be subject to.

The technicality of being an independent and non-governmental entity allows
them to collect and in turn share back[to the NSA] information about the
traffic that crosses their fabric circumventing those pesky laws which
purportedly prohibit the NSA from operating within our borders and inspecting
local-only traffic.

AT&T is only going to be checked by legislation now as it has always been. The
last time they were broken up they magically reassembled themselves because
voters allowed it.

Until we as a country decide that communication infrastructure, like roads,
can't be owned by quasi public/private abominations like AT&T but instead only
held by us, the people and our government we will continue to get the worst
from this present unholy union.

------
394549
> Just two months ago, AT&T said in a court filing that buying Time Warner
> would allow it to lower TV prices. The US Department of Justice tried to
> stop the merger, arguing that it would raise prices for consumers, but a
> federal judge sided with AT&T. The merger was completed on June 15.

Someone please explain to me why AT&T (or its counsel) isn't in contempt of
court or guilty of lying under oath? Did they just use weaselly language in
their briefs and testimony that didn't actually say anything of substance?

It seems to me like there's a serious flaw in this process if a company like
AT&T can make claims like it did without any obligation to follow through.

~~~
claytonjy
IANAL, but "would allow us to" is a far cry from "we will do so"; could be as
simple as that? They never _committed_ to lowering prices post-merger, just
said they _could_...theoretically.

~~~
394549
> IANAL, but "would allow us to" is a far cry from "we will do so"; could be
> as simple as that? They never _committed_ to lowering prices post-merger,
> just said they _could_...theoretically.

Yeah, I was thinking along the same lines, but I didn't want to rely on Ars
Technica's paraphrase.

I would hope such "arguments" could be efficiently shot down by the
observation that, by the same logic, buying Time Warner would similarly allow
[AT&T] to buy every American a pony. The likelihood of that happening is
similar to the likelihood AT&T would lower its prices post-merger.

------
redler
If pressed to actually provide reasoning, I'd expect something like "This
service was drastically underpriced and would not have been viable long-term.
The merger has afforded us greater market vision and economies of scale, and
consumers are immediately benefiting by the fact that this increase is
substantially smaller than it would otherwise have been, saving them
millions."

------
lsiebert
well AT&T is crappy, but this article is poorly sourced. The CEO has said
exactly that before, but the court filing is about what the government could
prove, not about what will happen.

[https://www.cnet.com/news/at-t-ceo-makes-the-case-for-
time-w...](https://www.cnet.com/news/at-t-ceo-makes-the-case-for-time-warner-
megamerger/)

------
waydowntogo
Seriously?

AT&T just spent $85bln and someone believes the prices will be lower?!

~~~
selectodude
AT&T bought assets with that money. They're receiving income that in theory
should be offsetting what they spent. It's not like they bought a car and a
nice dinner. The money isn't gone.

~~~
waydowntogo
The money isn't gone but cash-flow is.

With this step they will have better cash-flow earlier.

~~~
selectodude
Yes, raising prices tends to do that. Doesn't mean they had to in order to
finance the deal. They did it because they could.

------
jrnichols
The content providers see the clouds and they want more money too.

On the digital side, I did noticed that YouTube TV, Sling, and now DirecTV Now
are all raising their prices.

------
HelloFellowDevs
Surprise, surprise?

------
NeoBasilisk
I'm absolutely shocked.

------
pbarnes_1
WhoCouldHaveSeenThisComing(tm)

------
dmitrygr
Also, grass is still green, and sky is still blue.

------
chrischen
Let's be honest the judge was right in that AT&T/Time Warner doesn't offer
much against the Facebook/Netflix/Amazon/Apple stack.

