HBO Max - A Potential Winner?

Yesterday, AT&T (WarnerMedia) announced its new streaming service HBO Max.  The service will launch in May of 2020 and will be offered for free or discounted to subscribers of AT&T’s premium unlimited wireless plans or one of its MVPD services (U-verse, DirecTV).  Entering a market using well-established platforms (wireless, MVPD), with millions of subscribers on each, and then adding the cherry-on-top of price incentives, gives AT&T a huge competitive advantage in the increasingly crowded market for streaming services.  It is not a winner-take-all market as households will subscribe to multiple services.  However, you certainly would expect that AT&T will be one of the winners.  Much like you would expect that Google, Amazon, and Facebook (BIG TECH) will succeed when they introduce applications and new services on their online platforms.

So, it begs the questions.  Does the vertical integration of platform and content, created with the 2018 merger of AT&T and Time Warner, give the media-telecom firm an unfair market advantage?  The DOJ was concerned about that and it is why it filed an antitrust suit to block the merger.  (The courts did not have the same concern and approved the merger.)  This summer, the DOJ opened a broad antitrust review into the BIG TECH firms’ business practices.  If harmful conduct is discovered, what action might regulators take?  Would it be right to extend review (and action) to other firms with similar vertical structures, like AT&T?

The review could start with the year-long carriage dispute between AT&T and its satellite competitor, Dish.  Since last November, Dish has not carried HBO, including during the spring release of the final season of Game of Thrones.  Dish believes that AT&T’s behavior in contract negotiations has been anticompetitive, using its leverage to foreclose access to the premium content favored by many.