While advocacy groups are not very delighted with AT&T’s Time Warner acquisition and are in touch with U.S. regulators to block the deal. AT&T might, however, manage to avoid any review by the Federal Communications Commission(FCC), at all. This fortunate event(for AT&T of course!) can take place on the grounds that the federal agency can be involved only if any FCC licenses are transferred to AT&T.
While we have had several top AT&T executives comment that Time Warner, will in all likelihood, continue to operate in its present form but you can be sure that the telecom giant hasn’t bought the media powerhouse for just the pleasuring of owning the Game of Thrones franchise. AT&T is certain to leverage its Time Warner acquisition in a way that improves its business prospects.
That said, the company may still need to go through regulatory scrutiny, for the deal to pass through. Regulators have been wary of consolidation and large-scale deals and have often moved to block them. So it is but natural for AT&T to be nervous. However, the company may just manage to sneak past over its Time Warner acquisition.
Here is what various media houses report:
- Reuters: Despite its big media footprint, Time Warner has only one FCC-regulated broadcast station, WPCH-TV in Atlanta. Time Warner could sell the license to try to avoid a formal FCC review.
- Bloomberg: WPCH-TV, which is unaffiliated with any major network, is a small station that broadcasts re-runs and old movies, and it’s likely worth very little relative to the $85.4 billion AT&T/Time Warner deal. Companies use sales, transfers, and spinoffs around larger deals in order to face friendlier regulatory review all the time.
- Multichannel News: Some analysts and one veteran communications attorney thought there might be some satellite uplink licenses, but an FCC source said they did not know of any.
Why this fuss over Time Warner acquisition?
Consumer advocacy group Public Knowledge fears that the merger will raise many competitive concerns. For instance, if AT&T with its vast network, decides to shower favor upon content from one particular media house over that provided by others, well that could possibly lead to issues and would be against the spirit of free competition.
According to Public Knowledge Senior Counsel John Bergmayer,
Vertical integration between programming and distribution in particular raises a number of issues. AT&T-owned DirecTV, for instance, might favor Time Warner content, crowding out or refusing to carry alternative and independent programming that viewers might prefer.
AT&T might also make it more expensive or difficult for competitors to DirecTV or to its streaming service to access Time Warner programming, hoping to drive customers to its own platforms.
AT&T could also give preferential treatment to its own programming and services on its broadband networks—indeed, it has already announced that it plans to zero-rate its upcoming online video service.
AT&T argues that customers will benefit from the merger by receiving “enhanced access to premium content on all their devices, new choices for mobile and streaming video services, and a stronger competitive alternative to cable TV companies.” So yes, it appears as if it might try selling or spinning off any properties with an FCC license to avoid the inquisition altogether.
However, it might be in the best interests of everyone, if the FCC does take a look at how things will happen. Not in a prejudiced manner that seeks to go against the deal simply because it is huge, but in a way that looks at the implications of the deal from the perspective of the customers and competitors. AT&T hopes to close the Time Warner merger by the end of 2017.