AT&T-Time Warner could escape deeper regulatory scrutiny
AT&T’s enormous, $85.4 billion purchase of one of America’s top media conglomerates could radically reshape the digital economy, making the deal’s next step — regulatory review — hugely important to the way consumers access their media. But missing from the process could be the Federal Communications Commission, a key player in the battery of mega-deals recently to hit the market.
The Justice Department is likely to analyze whether the transaction could hurt competition, and could impose requirements on AT&T that might restrain anticompetitive practices stemming from the deal. The FCC, as the nation’s top telecom, cable and broadband regulator, could seek to impose different — but no less important — conditions. But the FCC’s involvement hinges on whether Time Warner sells certain assets to AT&T.
If it is excluded from the process, it could weaken regulators’ ability to prevent harms to competition, said Gene Kimmelman, a former Justice Department antitrust official who is now president of the consumer advocacy group Public Knowledge.
“The kinds of things I can think of that would potentially prevent anticompetitive behavior may include detailed regulatory oversight that DOJ is not inclined to engage in — and doesn’t think it has the capacity to engage in,” he said. “They may be tools that are not available without the FCC being involved.”
FCC may be left out
The FCC generally has a say in acquisitions that involve the sale of assets regulated by the agency. This may include, for example, TV stations owned by one of the two companies. But in the deal involving AT&T and Time Warner, no such assets may change hands. Time Warner owns just one Atlanta-based TV station, and it has not announced whether it will be sold to AT&T. The station could be spun off and excluded from the deal - which would also eliminate any reason for the FCC to become involved, said Rich Greenfield, an analyst at BTIG, in a research note Saturday.
Comcast-NBC deal
The FCC played a central role in overseeing the last mega-deal resembling the AT&T-Time Warner tie-up. In 2011, the FCC gave Comcast a green light to acquire NBC Universal — but only under certain conditions aimed at preventing the combined company from abusing its newfound power. The Justice Department approved the deal with its own set of conditions.
Any conditions imposed by the Justice Department on the AT&T-Time Warner deal are likely to be structural in nature — perhaps requiring the two companies to sell off some assets, for instance.
“The DOJ enforces the antitrust laws, which are focused on economic harm to competition,” Andrew Schwartzman, a public interest law expert, said.
“The FCC looks to the same concerns, but it operates under the Communications Act’s public interest standard. That gives it a much broader purview to look to potential future problems.”
Examples of behavioral conditions the FCC might seek include, for example, a ban on AT&T offering Time Warner’s content to AT&T’s wireless subscribers on an exclusive basis. Or the agency may try to prevent AT&T from exempting Time Warner shows and movies from cellular data caps, a practice known as zero-rating that consumer advocacy groups have targeted as being potentially unfair to other companies.
But if the FCC were not involved in the transaction, many of these behavioral fixes could be left on the cutting-room floor.