Stop! Turner Time!*

Can't touch this! Unless you know about the effects of vertical mergers. Ring the bell, school's back in, and Team Awesome is here to break it down.*

Time Warner, not to be confused with the fictitious Rowling-ian Time Turner,** is no stranger to the merging scene. Before it got together with AOL, Time Warner was involved in a merger with Turner Broadcasting. The 1996 merger of Time Warner and Turner Broadcasting System falls into the category of vertical mergers since Time Warner creates the shows that Turner broadcasts.

As with all vertical mergers, both the positive and negative impacts must be weighed. In the case of the Time Warner-Turner Corporation merger, the combining of these two companies had the potential to restrict competition in cable television programming and distribution (as with all vertical mergers). However, the FTC ultimately decided - and Team Awesome agrees - that with a number of structural changes and restrictions "designed to break down the entry barriers created by the deal", the positives of this merger outweighed the negatives. Specifically, the FTC pinpointed the major benefit of this merger: access. The FTC Chairman Robert Pitofsky said that "this settlement would preserve competition and protect consumers from higher cable service prices and reduced programming choices by ensuring that competing cable operators, new technologies and future programmers can gain access to Time Warner/Turner's customers and programming."

Team Awesome agrees with the FTC's decision - while vertical mergers often result in negative consequences, it is crucial to take other factors - such as access in this particular example - into account. This is one case where an analysis of welfare effects led to the conclusion that this vertical merger was too legit to quit.*

- Jon Carrier, Joyce Chang, Dexter Galazo, Vinu Ilakkuvan

*pop culture reference 1
**pop culture reference 2