Netflix CEO Wary That AT&T's Latest Merger Could Hurt Streaming Competitors

Predictions

from the now-witness-the-firepower-of-this-fully-armed-and-operational-battle-station dept

Streaming video competitors are justifiably nervous about AT&T’s $85 billion acquisition of Time Warner. Consumer advocates have been raising alarm bells since the deal was announced, warning that AT&T could make it more difficult than ever for streaming providers to gain access to the content they’ll need to compete with AT&T’s upcoming DirecTV Now streaming service. They’re also concerned that AT&T will continue to use zero rating to give its own content a distinct advantage, while penalizing streaming competitors like Netflix and Amazon.

Speaking at the Wall Street Journal’s WSJ.D Live conference this week, Netflix CEO Reed Hastings made it clear that he’s a bit worried that AT&T will give Time Warner-owned HBO specifically an unfair leg up in the market (warning: annoying autoplaying video):

“We want to require that for AT&T customers, that HBO and Netflix are treated the same,” said Hastings in an exclusive interview with CNBC at the WSJ D Conference. “Now that they’re going to own HBO we think that any special treatment for HBO data would be inappropriate, but I think that’s pretty basic.”

Basic, but not likely. AT&T has already made it clear that it intends to exempt its new DirecTV service from usage caps, and the FCC has made it equally clear that it has no intention of doing anything about this new tilted playing field we’ve constructed. Yes, we’ve passed net neutrality rules in the States, but it’s beginning to look more like we have no intention of actually enforcing them in any meaningful capacity. As a result, companies like AT&T, Verizon and Comcast are now giving their own content a leg up while regulators twiddle their thumbs.

Hastings doesn’t want his stock to take a hit, so he joked that while things could get tougher for Netflix in the face of a larger AT&T, the company could benefit by sopping up the employees fleeing the mega-union:

“There’s a lot of AT&T investment in content, that could make things tougher,” said Hastings. “On the other hand it’s probably going to get easier for us to recruit Time Warner executives, which are a very talented bunch.”

Hastings also made it clear that while AT&T continues to believe that mergers and acquisitions are the path to the promised land, Netflix will remain focused on generating original content (so it’s not beholden to the whims of broadcasters) and developing a service people actually want to use:

“That’s what made us successful for the last 14 years is we’ve done no M&A. We’ve stayed out of all those discussions. We don’t do bankers meetings. We’re very old school in that way,” said Hastings. “Let’s just build the greatest service on earth, and again, it’s done very well for our shareholders.”

While zero rating is an extremely bad idea for consumers and emerging markets, many consumers still don’t quite understand what’s wrong with the concept, enticed by the false idea that the concept gives them something for free. What it actually gives them is a new environment where the biggest companies get to use their monopoly over broadband markets to give their content arms an unfair leg up in the market. Assuming the deal is approved with the usual flimsy conditions attached to these kinds of deals, consumers are about to get a front row seat to witness precisely what this looks like.

Filed Under: gatekeepers, merger, streaming
Companies: at&t, netflix, time warner