The US Justice Department is currently suing to block the proposed acquisition of Time Warner by AT&T, and the court case is bringing all kinds of salacious details to light. On Thursday, a Justice Department attorney presented evidence to back up what everyone already suspected: That AT&T only wants to buy Time Warner to prop up its ailing cable empire.
According to Reuters, Justice Department attorney Julie Elmer presented an email and internal report which show AT&T exec Gregory Manty said buying Time Warner would help AT&T slow the well-documented demise of cable, which he called a “cash cow.” While the fact that you’re being milked for profit probably won’t come as a surprise, the evidence is unlikely to help AT&T’s legal case.
The Justice Department’s main argument against the merger is that by owning Time Warner’s content, which includes must-have channels like CNN, AT&T could raise prices for pay-TV rivals and keep costs prohibitive for online streaming services. The transition to streaming services, away from traditional cable, is one that’s costing pay TV companies millions of subscribers and billions in revenue every year.
With control over a significant portion of the content, AT&T would be in a good place to keep prices high among rivals and prevent streaming TV services from offering cut-price cable alternatives. With cheap home internet increasingly becoming a reality, cable companies are faced with the prospect of millions of subscribers cutting the cord over the next decade. AT&T already has a streaming service, DirecTV Now, but industry experts are dubious about whether it’s making any money at all at the $35/month price it currently sells for. The average cable bundle, by comparison, costs $104 per month.