Why the AT&T/Time Warner merger is bad for Texas consumers

Photo by Shelby Knowles for The Texas Tribune

Our state has a long history of fighting monopolies, from the declaration in the Texas Constitution that “monopolies are contrary to the genius of a free government, and shall never be allowed,” to Texas’s leading the way to end Standard Oil’s dominance more than a century ago. But aside from honoring our pro-competition legacy, why should you care about the potential merger of Time Warner and Dallas-based AT&T?

For one, there’s the obvious question of how the deal could affect how you consume media content, from how much you pay for cable to the number of quality shows being produced. But there’s another, deeper concern at play — one that relates to the problems of income inequality as well as undue corporate influence in our democratic process.

The Trump administration’s challenge of the AT&T-Time Warner merger is one of the most important anti-trust cases of the decade. The case, for which the trial kicked off last week, has received plenty of attention because of the sheer size of the two companies — AT&T is already the second-largest company in Texas, and Time Warner is the third-largest media company in the world — and how its outcome could shape how media companies compete for years to come. But its effects could also reach a wide range of sectors across our economy.

At the core of the two companies’ argument for why the merger should be permitted is that it will allow them to compete with rivals like Facebook and Google (not to mention Netflix and Amazon). Meanwhile, one might argue that the Trump administration is motivated to challenge this merger not for sound economic or legal purposes, but rather as a way for Trump to take aim at Time Warner, since the company owns CNN, which he just might view as his biggest political rival.

We should be skeptical of the Trump administration and its potentially pernicious motives. But we should be equally skeptical of corporate concentration. Challenging this merger is the right thing for our economy and our country. Two key reasons support this view.

First, this merger would exacerbate the non-competitive nature of the media sector, where a handful of companies dominate almost like a monopoly. AT&T and Time Warner want to achieve greater scale to compete with other media behemoths; instead, we should be moving in the other direction, toward reducing the size of dominant industry players. Until then, a short list of companies will have disproportionate control over pricing, content and the overall consumer experience.

Second, how this case is decided could help shape our economy as a whole for years to come. Will we let huge companies dominate not just our media sector, but also banking, air travel, healthcare, and so many other industries? Or will we recognize the need to update and upgrade our anti-trust laws and implement policies that help small businesses compete, employees earn better wages and consumers enjoy better pricing and more choices?

The problem of monopoly power quietly shapes our economy in many ways, including by worsening income inequality. But it also has a major impact on our political and personal freedom. Simply put, mega-corporations have too much political power because they have too much economic power, which they use — via donations and lobbying efforts — to get the attention of policymakers while drowning out the voices of individual people.

Let’s not get distracted by President Trump’s vengeful nature. Instead, let’s focus on the broad impact that this important case might have. Let’s keep our eye on the ball for the sake of a freer and fairer market and a more competitive and dynamic economy. If we don’t, these key decisions in Washington will have negative effects across Texas and throughout the country.

Disclosure: AT&T has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

Alex Triantaphyllis

Director of Immigration and Economic Opportunity, BakerRipley