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AT&T and Time Warner CEOs get grilled on Capitol Hill over their proposed merger

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AT&T and Time Warner CEOs get grilled on Capitol Hill over their proposed merger

WATCH  |  The deal will go through a stringent regulatory review. If it does pass, it likely won't happen until later next year.

UPDATE 12:50 p.m. EST:  AT&T's CEO has said the deal would result in lower prices.

Senators on both sides of the aisle are skeptical of AT&T and Time Warner's proposed mega-merger -- specifically with how it will impact consumers' pocketbooks. That is crystal clear.

"The cost of cable television continues to be a burden on too many consumers," Senator Amy Klobuchar, D-Minn., said.

"The potential anticompetitive favoritism that the combined firm could bestow on its own products is not limited to price or access, but extends to the quality of the offerings," Senator Mike Lee, R-Ut., said.

The two CEOs defended their multi-billion dollar deal.

"AT&T is a communications company; we distribute content. Time Warner is a media and entertainment company; they create content. This is a classic vertical merger and it eliminates no competitor from any market," AT&T CEO Randall Stephenson said.

"We can accelerate the process of introducing innovations on a nationwide basis, and we can add more flexibility to adjust to changing consumer expectations," Time Warner CEO Jeff Bewkes said.


One argument that opponents of the deal have voiced is the lack of existing players in the space. Another question raised is why the two companies had chosen to merge rather than create a content partnership?

AT&T has said merging would allow the companies to innovate more quickly.

And when asked whether a combined company would restrict content from other distributors, Time Warner's Bewkes quickly responded "there is simply no incentive for us to do it... it would hurt our business."

On social media, people called out AT&T when it argued the deal would be good for disruption.

Meanwhile, Mark Cuban's social media analogies were received with confusion.

This merger is not only one of survival and opportunity.
Mark Cuban

The billionaire investor defended the deal saying in a world of fast-paced digital change, old media can't compete with the likes of Facebook and Google flying solo.

"This merger is not only one of survival and opportunity, but one that is needed by consumers. We need more companies with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook," Cuban said.


Both Senators Oren Hatch and Al Franken took a skeptical tone when asking the CEOs about competition and content distribution.

Sen. Hatch specifically asked to hear how the merger would impact the "TV Everywhere" initiative to make pay-TV subscription portable and offer more streaming products on mobile.

Time Warner's Bewkes responded saying the goal is to create more on-demand and streaming options to consumers at better price points by getting essentially all players to participate.

If it goes through, AT&T could use tactics like making it easier to access their content with special price offers as a means to attract new customers. So it's not surprising the topic of AT&T's zero rating program or net neutrality came up as the hearing wrapped up.

"How do we know you aren’t giving DirecTV a deal because you own it?" Franken asked. AT&T's Stephenson said there was a real cost do providing free data, but didn't elaborate.

AT&T and Time Warner CEOs get grilled on Capitol Hill over their proposed merger

WATCH |  What would a merger between AT&T and Time Warner do to consumers?

UPDATE 10:40 a.m. EST:  In opening remarks, the CEOs defended the merger.

AT&T CEO Randall Stephenson said in his opening remarks the deal would lead to new innovation, rather than consolidation or a quashing of competition.

"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models, giving customers more options, creating more competition for cable TV providers and accelerating deployment of 5G wireless broadband," Stephenson said.

ORIGINAL STORY

The CEOs of AT&T and Time Warner were on Capitol Hill on Wednesday to meet with -- and attempt to convince -- senators to approve a merger between the two telecom titans.

They will appear before a Senate antitrust panel to discuss their proposed $85 billion union, about which Democrats and Republicans have already raised antitrust concerns.

The deal, which requires federal regulator approval, would be one of the biggest media deals ever should it go through.

The deal would unite AT&T's millions of subscribers and Time Warner's deep media lineup.

A pretty tough regulatory review is expected and so the deal likely won't be completed in full until 2017.

President-elect Donald Trump even said before becoming elected that he would block the deal from being completed.

According to the Associated Press, billionaire business mogul Mark Cuban is expected to attend the hearing and testify in favor of the merger, which he has said would enhance competition.

In their opening remarks, lawmakers expressed some of their main concerns, saying the merger could raise prices for already cash-strapped consumers as well as inhibit competition in the media and communications landscape.

They noted that the newly-unveiled DirecTV Now streaming service was a move in line with consumers' current needs, but feared bringing the two companies together could prevent future innovation.

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