AT&T is using the growing power of Silicon Valley to justify its acquisition of Time Warner
- AT&T is pushing back against the US government's attempt to block it's acquisition of Time Warner.
- AT&T CEO Randall Stephenson cited the power of Silicon Valley companies like Google, Facebook Amazon and Netflix to defend against the idea that the deal would hurt competition.
- "This defies logic," Stephenson said.
Here's a surprise: an old media CEO citing the growing power of new media to try and get his away.
On Monday, AT&T CEO Randall Stephenson responded to the US government's attempt to block it's acquisition of Time Warner, citing giants like Amazon, Google, Facebook and Netflix as examples of companies with expanding clout.
Essentially, Stephenson's argument to the US Department of Justice was: you think AT&T buying Time Warner is going to create a monopoly? What planet are you on? Our little $85 billion deal is peanuts compared to the disruptive power of those global juggernauts.
Stephenson said at a press conference that digital media companies like Facebook and Google deliver content "to literally billions of customers."
And Amazon and Netflix are spending billions on content, and going around traditional media distributors.
"This comes at a time when the communications and media industries are going through rather radical change," Stephenson said. "Massive, large scale internet companies with market caps in the hundreds of billions of dollars are creating tons of original content, and they're distributing it directly to the consumer. This is disrupting both industries ... and it's being done at a level and a pace that most of us could not of conceived of five years ago."
Given those conditions, AT&T and Time Warner are far from a monopoly, Stephenson argued.
"And the government contends that AT&T, with 25 million TV customers, and Turner, with a single digit share of all media watched, will have unlawful market power," he said. "This defies logic and is unprecedented."
Interestingly, there is a precedent for a merger between traditional players citing the competitive power of tech giants to argue its case. And it didn't work.
Last year, Staples and Office Depot called off a potential $6 billion merger, despite arguing that Amazon's position in selling office supply goods would keep the market competitive.
Since then, Amazon's power has only grown in retail. And the same can be said for Netflix, Google (with YouTube) and Amazon's disruptive power to the traditional television industry (witness lower TV ratings, cord-cutting, etc.)