“When you play the game of thrones,” a Machiavellian royal with an eye on the crown tells a rival, “you win or you die.”
The line, adapted as the title of both HBO’s wildly popular series and the George R.R. Martin novel that inspired it, illustrates the stakes for independent television networks in AT&T’s takeover of Time Warner, a deal the U.S. government is attempting to block.
The media’s consolidation through vertical mergers such as Comcast’s takeover of NBC in the Obama era and AT&T’s current bid for Time Warner is putting progressively more power in the hands of a shrinking pool of executives, enabling businesses to control both content creation and distribution, said Daphna Ziman, the president of Cinemoi North America, an independent network that began broadcasting in the U.S. in 2012.
Such deals give the companies — known under federal law as multichannel video-programming distributors, or MVPDs — a clear incentive to shut out networks and programming they don’t control, ultimately stifling innovation, she said in an interview.
Ziman blames the trend for the abundance of stale, reality TV programming that she says is costing the U.S media its historical dominance internationally.
“I can’t tell you how many young people have come to me with brilliant ideas” that have been rejected because media conglomerates’ business strategy relies on cutting off competition before it begins,” she said. As a result, the best new ideas — those that have the potential to be the next generation’s “Breaking Bad” or “NCIS” — are often limited to Web platforms like YouTube, where they attract viewers but may struggle for access to financial resources.
Similar concerns were cited by the U.S. Justice Department, which went to court this year to fight AT&T’s $85 billion purchase of Time Warner and is awaiting a judge’s decision in the case. The move was an unusual one, since antitrust regulators frequently focus on mergers of direct rivals rather than companies at different points in the supply chain.
Still, Makan Delrahim, head of the Justice Departments’ antitrust division, argued that the transaction would allow an emboldened AT&T to use its control over Time Warner networks from CNN to HBO, which carries “Game of Thrones,” to force rival distributors like Verizon to pay more for distributing them.
While AT&T rejected that contention, the mere fact that it possessed such power would change the tenor of negotiations, the Justice Department said.
“In the Cold War, the most destructive weapons were never used, yet the arsenals and defenses available to each side undeniably influenced every negotiation between East and West,” Delrahim said in a May 8 court filing. “Leverage matters in video content negotiations because millions of dollars change hands depending on who blinks first.”
If the deal succeeds, he said, AT&T would also work to slow the industry’s transition to Web-based streaming, quashing innovation and forcing viewers to pay higher bills, and it would have an incentive to keep future competitors out of the market altogether. That’s a concern Republican Sen. Chuck Grassley, of Iowa, echoed in a Judiciary Committee hearing shortly after the merger was announced.
“No one can put blinkers on for long enough not to notice the bundles and the mergers and the way the MVPDs have been hogging the bandwith,” Ziman said. “The track record proves to us what they have basically done, through corporate power and greed, is manage to take an industry that was the best foreign policy for the U.S. around the world and literally destroy it.”
Ensuring that the industry’s landscape is level enough for new arrivals to compete is vital to regaining that strength, she argued, as well as the soft U.S. power that came with it.
The global proliferation of American-made television shows and movies in past decades, Ziman said, depicted the country’s lifestyle and values in ways that garnered friends around the world, enticing many of them to relocate. Born in Israel, she counts herself as part of the latter group.
“I grew up only wanting to watch American programming because it was everything,” she recalled. “It showed you where the world was going. You felt like you wanted to be American — everybody around the world was wearing jeans. American culture became the best, and it gave power to the U.S. in terms of cultural pioneering.”
