Cable customers may want to gird their loins for higher prices.
On Tuesday, a federal judge ruled against the Department of Justice in its case against AT&T T, -6.20% and Time Warner TWX, +1.68% allowing the $85.4 billion merger deal to proceed. The judge ruled that the DOJ could not block the merger from proceeding even if it were to launch an appeal.
The deal was first raised in October 2016, at which time it immediately drew the scorn of then-presidential candidate Donald Trump.
AT&T plans to close the merger June 20 or earlier so that it “can begin to give consumers video entertainment that is more affordable, mobile, and innovative,” David McAtee, AT&T general counsel, said in a statement. (Time Warner did not return a request for comment.)
Here is what consumer advocates and industry analysts say consumers should expect from the merger:
AT&T customers will reap the benefits—at the start
Subscribers of AT&T’s services — including wireless phone service, home internet, cable TV and DirecTV — need not worry too much about this deal hurting their wallets, said Chris Mills, news editor at BGR, a news website focused on mobile technology and consumer electronics.
“In the very short term, there’s very little chance that AT&T customers will see higher prices,” Mills said.
If anything, AT&T’s existing customers may see improved offerings as a result of the deal. By getting access to Time Warner’s content, freebies such as a complimentary subscription to HBO could become more commonplace.
Jonathan Schwantes, senior policy counsel for Consumers Union, said Time Warner content, like HBO, could be bundled into packages for AT&T’s wireless subscribers “where streaming that content won’t count against data caps.”
Others see AT&T using this as an opportunity to create new forms of video content, such as special CNN packages for AT&T mobile customers, and an expanded range of content made for 4K-resolution televisions for AT&T customers.
For everyone else, accessing content will be more difficult and expensive
Because AT&T will now have control over a wide array of content from Time Warner — including CNN, HBO and The CW — it will have more power to affect its competitors’ pricing.
With Time Warner’s content behind it, AT&T will have more leverage to charge higher fees to other cable and satellite television providers such as Dish Network DISH, +1.48% or Spectrum. And inevitably, any higher costs will be passed onto consumer.
Cable consumers may face the same quandary as those who use multiple streaming platforms and devices. For instance, Amazon AMZN, +0.36% doesn’t allow Prime video streaming on Google Chromecast GOOGL, -0.34%
Consumers may need to jump through more hurdles to access their favorite shows. AT&T will control Time Warner’s content post-merger. Comcast CMCSA, -0.19% owns NBCUniversal’s media content and multiple companies including Disney DIS, +1.90% are currently jockeying for 21st Century Fox’s holdings FOXA, +7.70%
The growth of streaming services could come to a halt
AT&T already controls one of the largest players in the video streaming industry, DirecTV Now. Nevertheless, cable and satellite TV is such a cash cow for AT&T, Mills said, the company could have a vested interest in limiting the expansion of streaming services.
And one way AT&T could achieve that through its ownership of Time Warner is by restricting access to its film and TV content. In doing so, AT&T could make competing streaming services appear less attractive to some viewers, thus limiting their subscription base and their ability to grow.
Your cell phone bill could get cheaper
Over in the wireless market, AT&T’s purchase of Time Warner could spur other cable providers to compete more effectively, Mills said. Comcast already has its Xfinity Mobile offering, and Charter Communications CHTR, -2.05% announced plans last year to form its own wireless offering.
That added competition could help counteract the consolidation the wireless market has seen over the years and keep costs down, Mills said.
It could also spur companies to invest more resources into developing the higher-speed 5G wireless network in the U.S.
Other industries may take note
While the Trump administration had yet to display any appetite for going after other pending mergers, executives at companies with pending deals may breathe a sigh of relief.
In particular, this ruling could improve the viability of the tie-up between AetnaAET, +3.73% and CVS Health CVS, +3.12% which is a vertical merger much like the AT&T and Time Warner deal.
“By approving this merger, the judge has done much more than raise cable bills,” Ed Mierzwinski, senior director for consumer programs at the U.S.-based Public Interest Research Group nonprofit, said in a statement. “He has encouraged more anti-consumer mergers creating corporate behemoths.”