AT&T deal to buy Time Warner would give it a bunch of major TV studios

AT&T's plan to purchase Time Warner for $85 billion would give the company far more than just a handful of popular basic cable channels — it would also include some of the most prolific television studios in the industry.

At a Senate Judiciary Committee hearing Wednesday, senators raised concerns that the deal would let the combined company charge competing distributors more for TV content — or to cut them off completely. The planned acquisition was often compared to Comcast's 2011 acquisition of NBCUniversal, which required conditions from the Federal Communications Commission.

Time Warner's television studios produce far more content for channels owned by its competitors, while Comcast tends to produce content for its own channels, according to a CNBC review of media industry database Variety Insight. (CNBC is a unit of Comcast and NBCUniversal.)

A handful of studios owned by Time Warner — most importantly Warner Bros. Television and Warner Horizon Television — are responsible for more than 80 television shows, according to the Variety Insight data. About a third of those shows were made for channels owned by competitors.

Those aren't small, unknown shows. Time Warner (which does not own a broadcast network itself) has had a hand in a hit show for each of the major broadcast networks. While Comcast's NBCUniversal is a major content producer for television, the vast majority of its output is created for its own channels. An NBCUniversal spokesperson declined to comment.

Warner Bros. is the world's largest film and television studio and the biggest producer of prime-time broadcast series, bringing in about $13 billion last year, according to the company's filings.

The deal would give AT&T a strong bargaining position at two steps in the television business: The combined company would own content that is in demand on a wide variety of channels, and it would own channels that are in demand for most major distributors, including AT&T. Time Warner's TNT, TBS and CNN are among the 10 most expensive basic channels for those distributors, according to data from SNL Kagan.

Time Warner CEO Jeffrey Bewkes and AT&T CEO Randall Stephenson said on Capitol Hill that the company would not use its stronger negotiating position to raise prices or cut off competitors. Bewkes said the company's business is based on full distribution and that cutting off other distributors would impede the company's ability to sell advertising and to acquire hit shows and movies. Stephenson has previously committed to maintaining Time Warner's "wide and broad distribution."

The week after the merger announcement, AT&T said it was launching a new over-the-top TV streaming option that would provide 100 channels for $35 a month — undercutting competitors in a way that Stephenson said was only possible before the company bought DirectTV last year.

Carolyn Finger, senior vice president at Variety Insight, agreed that the revenue from selling to competing distributors is a valuable asset for the company and that it would be a bad decision to jeopardize that business.

"Aside from raising some sort of regulatory ire, if they choke off Fox for example, it may not be in their best interest," said Finger. "They can't be entirely self-dealing."

Like the NBCUniversal-Comcast merger before it, the AT&T deal will face substantial scrutiny from regulators. President-elect Donald Trump said during the recent presidential campaign that he would block the deal.