In recent years, the FCC played a key part in blocking the mergers of AT&T and T-Mobile, and Comcast and Time Warner Cable, while also using its regulatory leverage to place pro-consumer conditions on the mergers it did approve — like getting Charter to agree to not use data caps for seven years. However, the FCC will apparently give AT&T its wish and not even chime in on the pending merger of AT&T and Time Warner.
This is according to recently elevated FCC Chair Ajit Pai, who told the Wall Street Journal today that he has no reason to review the merger if it’s not brought to the Commission’s attention.
“My understanding is that the deal won’t be presented to the commission,” Pai told the Journal.
A merger involving AT&T (the nation’s largest phone service provider, and second-largest pay-TV provider) and Time Warner (one of the biggest players in pay-TV content, with channels like CNN and HBO) might seem like it’s destined for FCC review, AT&T has maintained that the combination of the two companies won’t involve any swapping of airwave licenses, so the FCC need not involve itself.
Time Warner recently sold one of the few licenses it does have — Atlanta broadcast TV station WPCH — to Meredith. The merging companies contend that the remaining licenses are not for broadcast but for services like satellite uplinks, that they say won’t need to be transferred as part of the deal.
If the FCC does not get the chance to vet this merger, that means that only the Justice Department looks at the deal. However, unlike the FCC review process, a DOJ review does not take into account the generalized question of whether a merger is in the public interest. It’s that aspect of FCC vetting that has allowed the Commission to place certain restrictions on mergers over the years.
As it became more evident that a Pai-led FCC was unlikely to pursue this matter, a group of U.S. Senators recently asked AT&T to explain how this merger could benefit American consumers.
AT&T’s response was a bit baffling, claiming that neither AT&T nor Time Warner “approaches the market dominance that both would need to hobble distribution competitors” or raise prices.
AT&T downplayed the size of its pay-TV reach by saying that it is the second or third most popular pay-TV provider in most markets. What the company glosses over is that DirecTV, because it’s not tied to pesky network infrastructure like cable or fiber lines, is in virtually every market.