Cinémoi founder met with DOJ to discuss ways to reduce harm from AT&T-Time Warner deal

18 May 2017. By Curtis Eichelberger.

Daphna Ziman, founder and president of television network Cinémoi, met with Department of Justice lawyers last month to recommend ways the government could reduce the damage that AT&T's $85.4 billion merger with Time Warner would do to independent and minority-owned programmers.

US antitrust agencies routinely meet with third parties to discuss a pending merger. Such meetings can lay the groundwork for the completion of a deal with restrictions designed to protect competition.

Ziman said she left the interview with the feeling that the investigators want to help protect start-ups and independents, who often introduce innovative new products.

"The lawyers involved at the DOJ were acting in a totally non-partisan way and assessing and studying the issue with integrity," she said. "Their desire is to make sure there are no antitrust issues. They were eager to listen and take it all in."

If the deal is completed, AT&T will distribute content created by Time Warner. One concern is that AT&T would favor its Time Warner content in several ways: through favorable pricing or data charges; by where it positions its content on the channel listings; and through investment to market Time Warner content.

Such deals — when an acquirer buys a company in its supply chain — are referred to as 'vertical' mergers and generally face less scrutiny for antitrust issues. Sometimes, however, the DOJ will require a consent agreement in which the buyer agrees to restrictions designed to protect competition and innovation.

Cinémoi, an independent 24-hour network that is currently shown on Verizon FiOS and Frontier, features vintage movies, interview series with contemporary actors and actresses, environmental documentaries and behind-the-scenes productions of film and fashion festivals.

Ziman proposed that the DOJ require AT&T to set aside a certain amount of bandwidth for independent and minority programming, or that it match every channel that Time Warner provides with a minority or independent channel.

"That's only a band-aid on a cancer," Ziman said. "But it creates opportunities for new entrants and competition to blossom."

She would also like antitrust regulators to require AT&T to give independent programing support in building an audience before pushing it to the Internet. Ziman said 85 percent of viewers still watch linear TV. Without establishing a following on TV first, it is more difficult to get viewers to migrate to the Internet.

"Don't throw them to the wolves on the Internet right away to comply with some requirement," Ziman said.

Ziman declined to detail other potential remedies she discussed with DOJ investigators.

In the past, she has taken issue with distributors charging independents big fees to air their programming, also known as pay-for-play.

She has also complained about zero-rated plans. Consumers often get a limited amount of data each month for their Internet-connected devices, and when they exceed that limit, they are charged overage fees. But zero-rated content doesn't count against the data plan. So if a company like AT&T makes its own content zero-rated, but charges for the data used to view a competing network, it undermines competition and makes it harder for the independent to survive.

AT&T and Time Warner announced their deal in October of 2016 and received a second request for information in December. AT&T says it hopes to close the deal by the end of the year.

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