A merger of the nation’s largest pay-TV provider (and second-largest wireless service provider) and a major multimedia conglomerate with multiple cable channels might seem like a gimme for review by the Federal Communications Commission, but AT&T now thinks it may be able to avoid or minimize scrutiny from the agency in its efforts to acquire Time Warner.
Dozens of pages deep into a massive regulatory filing [PDF] released yesterday by AT&T, the company gives a vague outline of how it may possibly sidestep the FCC spotlight.
“Time Warner has conducted a review of all licenses that it holds that are granted by the FCC,” says the company. “While subject to change, it is currently anticipated that Time Warner will not need to transfer any of its FCC licenses to AT&T in order to continue to conduct its business operations after the closing of the transaction.”
If, as AT&T contends, these licenses don’t need to be transferred — or if Time Warner divests itself of the licenses before merging — the companies seem to believe the FCC has no authority to intervene and review the merger.
The deal still must face antitrust scrutiny from the Justice Department, but AT&T and Time Warner have thus far maintained that they operate complementary businesses, but do not compete with each other.
FCC reviews can be much more general, scrutinizing not merely issues of competition, but whether a merger is in the public interest. In recent years, the FCC (along with the DOJ) have successfully blocked the merger of AT&T and T-Mobile, and of Comcast and Time Warner Cable (a former subsidiary of Time Warner that had been on its own since 2009). At the same time, the Commission did allow AT&T to merge with DirecTV, and it eventually blessed Time Warner Cable’s rebound romance with Charter Communications.
Of course, the political makeup of the FCC is about to change considerably, with Chair Tom Wheeler stepping down on Jan. 20, Democratic Commissioner Jessica Rosenworcel already out, and a pro-business administration coming into the White House.
However, on the campaign trail, then-candidate Trump railed against the AT&T/Time Warner Cable merger, saying it consolidated too much authority in the hands of one company. He even mused about breaking up Comcast and NBCUniversal for the same reasons.
It’s possible that such talk was campaign trail bluster. If so, the new FCC leadsership may not care to involve itself in the AT&T/Time Warner deal.
And if President-elect Trump does indeed still have his heart set on scrutinizing this merger, AT&T may be looking to take one regulatory tool away from him.
Speaking to Bloomberg, some industry experts believe AT&T might succeed at avoiding FCC review.
One analyst tells Bloomberg it would be “very hard” for the FCC to justify reviewing the merger if the licenses aren’t transferred, and that it would be out of character for the FCC’s Republican Commissioners to suddenly support scrutinizing a merger that doesn’t involve this sort of transfer.
Meanwhile, another expert contends that history favors some sort of check-in from the FCC on this deal.
“Precedent strongly suggests that satellite uplinks must be subject to full FCC review,” says Andrew Jay Schwartzman, senior counselor at Georgetown University’s law school.