Even before Donald Trump became the 45th President, the cable and telecom industries were active with mergers and acquisitions. This has been going on for more than a hundred years, but in 2013, word got out that Comcast Cable was attempting to buy Time Warner Cable. They kicked it around for a bit but with grumblings from the Justice Department and the threat of an anti trust lawsuit, Comcast decided to drop the bid.
Comcast/Time Warner Cable - NO I Mean Charter/Time Warner Cable
As soon as the Comcast Time Warner merger failed to happen, Charter Communications bought both Time Warner Cable and Bright House Networks. This made Charter the third largest pay television company behind AT&T at number one, with their purchase of DirecTV in 2015, and Comcast at number two. Not bad considering that in 2009 Charter had filed for bankruptcy.
AT&T/Time Warner Inc
Late last year AT&T announced that it was in talks to merge with Time Warner, Inc. Time Warner, Inc is a separate company from Time Warner Cable which is now owned by Charter Spectrum. Time Warner, Inc is a media company that owns HBO, Warner Brothers, and Turner Broadcast System. Time Warner Cable is, well, a cable company that delivers cable television, Internet and VoIP phone services. The two Time Warners were separated in 2009.
AT&T already owns DirecTV, making it the largest pay television provider in the US. Time Warner is the world’s third largest media and entertainment company, next in line behind Comcast/NBCUniversal and Disney/ABC.
If the AT&T plan to buy Time Warner Inc comes to pass, AT&T will have Time Warner Inc with all its content assets, along with the distribution systems of DirecTV and AT&T Uverse Cable. Even without Time Warner, Inc AT&T is already the 12th largest company in the world.
Earlier this year Verizon was rumored to have been looking at combining with Charter Communications. This is in addition to Verizon’s ongoing attempt to buy Yahoo.
If and when the AT&T/Time Warner merger happens the biggest mega-media conglomerate companies would be 1) Comcast, which already owns NBCUniversal, including Universal Pictures and DreamWorks Animation, 2) Disney, which owns ABC, Pixar, LucasFilms, Marvel and the Muppets. And 3) AT&T/Time Warner Inc which owns Warner Brothers, HBO, Turner Broadcast Systems and DC Comics.
Verizon/Charter
And then there is 4) Verizon/Charter: although Verizon and Charter are not content providers they are rumored to be looking to merge although there has been no official word on it, yet. Verizon already owns AOL, which used to be owned by Time Warner Inc.
Mergers and acquisitions to form larger communications companies have had an up and down reaction from the FTC, FCC the Justice Department and other government agencies. After 100 years of engulfing smaller telephone companies the Bell system was broken up in 1982 into AT&T and the seven “Baby Bells” Now most of them have recombined into AT&T and Verizon. Four of them are back under the name AT&T and two of them are part of Verizon (along with GTE).
The whole “let it get big, then break it apart” model that has happened over the last 100 or so years is the result of the changing legislative landscape. It all depends on the Cable/telecom lobby and whether the politicians follow their wishes.
1974 - 1984
In 1974 the US Dept of Justice filed an antitrust lawsuit against AT&T. Finally, ten years later it was settled. On Jan 1, 1984, AT&T was broken up into what was known as the Baby Bells. The 22 AT&T controlled companies, called Regional Bell Operating Companies, were formed into 7 companies (Baby Bells).
- Ameritech,
- Bell Atlantic
- BellSouth,
- NYNEX,
- Pacific Telesis,
- Southwestern Bell
- US West
1996
About 10 years after the breakup of Ma Bell, big business had lobbied Congress and the President to the point that in 1996 under President Clinton the Telecommunications Act of 1996 was passed, which allowed cross-ownership of giant companies. This set the stage for giant corporations to buy up thousands of media outlets across the country. Now about 90% of the country’s major media companies are owned by six corporations.
In the last 33 years since the Baby Bells were broken up, they have recombined like this:
- Ameritech, Bellsouth, Pacific Telesis and Southwestern Bell are now back under the umbrella of AT&T. Southwestern Bell actually changed its name to SBC then bought its parent company AT&T and took its name in 2005. In 1997 SBC had tried to buy AT&T right after the 1996 telecom law passed, but the FCC said “No.”
- Bell Atlantic and NYNEX are now called Verizon. They adopted the name Verizon when they merged with General Telephone (GTE) in 2000. GTE had been the largest non-Bell telephone company in the US until its merger with Bell Atlantic.
- US West merged with Qwest and is now part of CenturyLink. In addition to buying Qwest, CenturyLink also has absorbed Embarq and Level 3.
The top three telecom companies in the US, Verizon, AT&T, and CenturyLink, can all trace their lineage in whole or in part back to Ma Bell.
Of the 22 Bell Operating Companies that were broken up in 1984, ten of them are back under the AT&T name and nine are part of Verizon.
Now we have AT&T which owns DirecTV and is looking to buy Time Warner Inc.
Verizon is rumored to be in talks to buy Charter, who just bought Time Warner Cable and the Bright House Networks.
2016
Big business had gotten its way during the Bill Clinton Administration with the passage of the Telecommunications Act of 1996 and the telecom and media industries were banking on Hillary Clinton getting into the White House, and put more money behind her than all other candidates combined.
According to Opensecrets.org, Comcast donated almost half a million dollars to Hillary Clinton in her run for president in 2016. In total there were over a million lobbying dollars from the telecom industry and over $4,000,000 from other Internet industries that went into Clinton’s campaign fund.
It appears that they needn’t have been worried, although he expressed opposition to large mergers during the campaign, President Trump’s FCC announced in February it has no objection to AT&T’s bid to purchase Time Warner Inc.
In fact, the FCC under President Trump has already rolled back many of the “Open Internet” rules put in place by the previous administration. Although looking at Telecom donations to Hillary Clinton and the Telecom legislation passed under Bill Clinton it is not unthinkable that the same thing would have happened if Hillary Clinton had become President.
- By Wayne Porter