WASHINGTON – Media
companies plan to ask U.S. regulators to force AT&T Inc (T.N) and Time Warner Inc (TWX.N) to share their trove of customer data if the
telecom and content companies merge, fearing the combined behemoth would have
an unfair advantage selling targeted mobile advertising, a handful of media
executives told Reuters this week.

Customer data has become
a key to the media industry’s future as TV networks strive to provide the same
kind of advertising as digital companies like Alphabet’s (GOOGL.O) Google and Facebook Inc (FB.O), which tailor pitches according to what they
know about their customers.

AT&T’s proposed $85
billion acquisition of Time Warner would give the media company’s networks,
such as HBO, Cinemax and Turner, potentially unprecedented data about viewers
who have AT&T cell phones and DirecTV accounts.

The deal will be reviewed
by the U.S. Justice Department, and it is unclear how the enforcement agency
would approach customer data access as an antitrust issue since it has not yet
arisen as a source of contention in a major U.S. deal.

With the rise of online
and mobile video streaming services, the promise of sending different ads to
different viewers appears attainable, starting a race among established media
brands.

“With this deal,
Time Warner will have access to more data on the content consumption habits
than any other media company in the world,” said Patrick Keane, president
of Sharethrough, a platform for buying “native” ads.

If Time Warner can use
AT&T data to target ads to a group such as young, affluent men who watch a
specific sports team, it will have a huge new advantage with advertisers, said
an executive at a rival media company.

“The money will
gravitate to the programing with that data,” the person said, adding that
the company would go to regulators. “We are interested in making sure that
we have access to our customer data in the same way that Time Warner will have
access to data.”

If HBO, which has its own
over-the-top streaming video service, gets access to AT&T’s data about
viewers watching content on competitors like Hulu, Amazon or Netflix, that is
also an unfair advantage, said another executive at a separate media company
that also plans to ask regulators to act.

All the media executives
wished to remain anonymous because conversations are early and confidential.

AT&T and Time Warner
acknowledge that data is a key driver of the deal.

“What it allows us
to do is just move faster, with more innovation, better consumer offerings,
more different price points, more effective advertising, and therefore people
are going to see that more of the cost of content can be borne by
advertising,” Time Warner Chief Jeff Bewkes told CNN on Monday.

And AT&T Chief
Executive Randall Stephenson told Reuters at a conference in California that
the company is open to allowing other content providers access to customer
data.

“To the extent that
it keeps their content costs down, we’d be open to it,” he told Reuters.

Rivals are already
amassing a significant amount of data from multiple sources. Verizon
Communications Inc (VZ.N) will be able to tap data from Yahoo Inc’s (YHOO.O) 1 billion monthly users to tailor
advertising if it completes its $4.8 billion purchase of Yahoo’s core assets.

Customer data is a new
area for antitrust law, which enforcers will be pressed by media companies to
take on in the AT&T case.

“This is a
structural advantage that AT&T would have over its rivals, and competition
authorities should be concerned about the possible effects,” said John Bergmayer,
senior counsel at advocacy group Public Knowledge.

First the Justice
Department and Federal Trade Commission, which share the work of ensuring that
mergers are legal, must decide if there is a problem and then whether there is
a solution.

“Enforcers don’t
quite know yet what that (big data) means for antitrust or what to make of
it,” said Elai Katz, an antitrust lawyer with the law firm Cahill Gordon
& Reindel LLP.

Katz said that antitrust
enforcers would look at how much data was involved, whether it was available
from other companies and whether access was a competitive issue before deciding
whether it is worth addressing in the merger.

Antitrust enforcers
usually prefer that companies who want to merge solve any antitrust problems by
selling an asset, like a brewery or a factory, rather than have a behavioral
condition on a deal, like requiring licensing data, which is harder to enforce.

But such behavioral
remedies would “have to be considered in a case like this,” Katz
said.

The Federal Communications
Commission, which regulates the telecoms industry, still puts behavioral
conditions on merger approvals, but it was not clear whether the FCC will
consider this deal.

If AT&T has to share
data with media rivals, that could undercut the value of the deal, advertisers
said. But if AT&T can build a platform with addressable advertising and
targeted content, it might compete with new media such as Google, Facebook and
Snapchat, said Bernard Gershon, president of media and technology consulting
firm Gershon Media.

“The Holy Grail is
advanced advertising and delivering custom content and ads,” said Gershon.
“It is the data and the direct relationship with the consumer that makes this
deal so powerful.”

Sen. Bernie Sanders
called on the Justice Department Wednesday to block the $85 billion AT&T-Time Warner merger.

The Vermont politician warned in a letter to the department’s
antitrust division that the combination could result in a “gross
concentration of power” in news media, and suggested that blocking the
deal would help “preserve our democratic discourse and open competitive
markets for speech and commerce.”

“This proposed merger is just the latest effort to
shrink our media landscape, stifle competition and diversity of content, and
provide consumers with less while charging them more,” Sanders said.