AT&T will face off against the U.S. government this week in a high-stakes courtroom battle over whether it should be allowed to buy Time Warner Inc., the media conglomerate that owns top-rated cable networks like HBO, TBS, and CNN. The $85 billion merger was announced in late 2016, but the Department of Justice sued to block the deal a year later.
The antitrust trial has huge implications for the future of TV and big mergers in general. If you’re looking to follow along, I put together a glossary of helpful media-merger jargon. The list also doubles as a drinking game you can play with friends as you read coverage about the trial or watch coverage on cable news—take a shot every time a TV talking head says one of these things!
- Vertical merger: This is basically a merger between two companies that don’t directly compete in the same marketplace. It’s the backbone of AT&T’s argument that its takeover of Time Warner doesn’t violate antitrust laws. AT&T is in the distribution business; Time Warner is in the content business.
- MVPD: This sounds like a weird sports term, but it’s actually just a fancy acronym for a pay-TV provider. It stands for “multichannel video programming distributor.” It could be a cable company, a satellite TV company, or a streaming service (called a “virtual MVPD”). AT&T has three MVPD offerings: U-Verse, DirecTV, and DirecTV Now. Between the three of them, it’s the largest pay-TV company.
- SVOD: Another annoying acronym. This stands for “subscription video on demand,” and it usually refers to fee-based, streaming-only platforms like Netflix, Amazon Video, or Hulu. AT&T argues that it needs premium content like the kind Time Warner offers to stay competitive against these online giants.
- Clayton Act: This is the portion of federal antitrust law upon which the DOJ’s is hinging its lawsuit. The Clayton Act prohibits mergers—even vertical mergers—if the effect of the merger would be to substantially lessen competition. The DOJ is arguing that this merger would do just that by allowing AT&T to jack up the price of Time Warner’s content.
- Breakup fee: Although AT&T and Time Warner aren’t married yet, this is kind of like a divorce settlement. If the deal is blocked, AT&T will have to pay Time Warner $500 million “in respect of its time and expenses.” Not sure what the rest of us get.