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AT&T-Time Warner merger decision should be challenged, a Mason professor says

June 14, 2018

The U.S. Department of Justice should challenge a judge’s ruling that allows the merger between AT&T Inc. and Time Warner Inc. to proceed, a George Mason University professor said.

“I hope the Justice Department does in fact challenge and that it gets to a higher court,” School of Business finance professor Gerald Hanweck said. “In my estimation, the judge made a huge mistake on how to evaluate potential competition.”

For Hanweck, AT&T and Time Warner are similar businesses that do not accurately fit into the “vertical merger” narrative that says AT&T is a distributor of television content and Time Warner is a producer, meaning they do not compete.

“That’s such an oversimplification in the case of these two companies that it doesn’t make any sense,” said Hanweck, who was an economist in the Division of Research and Statistics at the Board of Governors of the Federal Reserve System, concentrating on banking company mergers. “This is not a simple vertical integration. These companies produce products that are precisely the same.”

“Both are major producers of internet services,” he said. “It’s not just AT&T. Time Warner has been in the internet business from day one, so you’re cutting down two potential competitors out of the market for each other’s services.”

If that is true, the market will continue to shrink if, as predicted, the decision to allow the AT&T-Time Warner merger sets off a wave of mergers between large media companies.

School of Business finance professor Derek Horstmeyer, whose expertise is in mergers and acquisitions, said the next big merger could be between Comcast Corp. and Fox Broadcasting Company, which could be followed by a joining of CBS Corp. and Viacom Inc.

And because the government will no longer  be enforcing net neutrality rules, companies now have the ability to regulate internet speeds.

For instance, the merged AT&T-Time Warner company could stream its programming at a faster speed than programs offered by Netflix, which it will distribute through its portal but also sees as a competitor.

“AT&T can play favorites here and say all of Netflix’s shows are going to slow down and all of the HBO Go and TNT we’ve acquired, we’ll offer at faster speeds to get people to leave competitors like Netflix,” Horstmeyer said.

“But that’s why you have competition, so [companies] can compete against that kind of thing,” Hanweck said. “Other companies will arise, and they have.”

“To me,” Hanweck said, “net neutrality was a way to preserve the larger companies’ positions. You don’t want to create a situation where you’ve given existing companies the power to maintain their market share. If this will allow more competition, I think it’s a good thing. If it doesn’t, then it’s not a good thing, and we won’t know until we actually see the results.”

Gerald Hanweck can be reached at 703-993-1855 or

Derek Horstmeyer can be reached at 703-993-9761 or

For more information, contact Damian Cristodero at 703-993-9118 or

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