AT&T Inc.'s blockbuster $85.4 billion deal to buy Time
Warner Inc. promises to reshape the media landscape—if the
companies can navigate a series of obstacles, including possible
opposition from U.S. antitrust authorities and objections by
lawmakers and media and telecom rivals.
Even before the deal was announced Saturday night, members of
Congress, industry groups and Republican presidential nominee
Donald Trump began to question it, contending the combination of
AT&T's millions of wireless and pay-television subscribers with
Time Warner's stable of TV networks and programming would limit
competition and hurt consumers.
Mr. Trump said if elected he wouldn't approve the deal "because
it's too much concentration of power in the hands of too few."
Former presidential candidate Bernie Sanders on Sunday called on
the administration to block the merger. "This deal would mean
higher prices and fewer choices for the American people," Mr.
Sanders wrote on Twitter.
On NBC's "Meet the Press" Sunday, Democratic Vice Presidential
nominee Tim Kaine said he shared the "concerns and questions"
raised by Democratic Minnesota Sen. Al Franken that the deal could
lead to higher costs and fewer choices. "Pro-competition and less
concentration, I think, is generally helpful, especially in the
media."
Experts compared the deal to the acquisition by Comcast of
NBCUniversal, which went through in 2011 after 13 months of review.
U.S. regulatory officials and rivals have expressed concerns that
some government conditions regarding Comcast's behavior, such as
its requirement to not weigh in on strategic decisions at streaming
service Hulu, were tough to monitor and enforce.
AT&T Chief Executive Randall Stephenson played down the
objections from lawmakers, politicians and industry groups, arguing
the combination of a content provider and a distributor didn't
increase industry concentration and wasn't the kind of deal
regulators take issue with.
"It is going to have to go through a regulatory review process
that is dictated by rules, regulations and laws," Mr. Stephenson
said in an interview. "I can't control what the politicians say and
feel about it."
AT&T affirmed Sunday that it would continue to run Time
Warner's media assets autonomously amid concerns among current and
former staff particularly at CNN that editorial independence might
be compromised. "CNN is an American symbol of independent
journalism and First Amendment free speech. My board and I are
clear—CNN will remain completely independent from an editorial
perspective," Mr. Stephenson said in a statement.
AT&T is no stranger to Washington politics, including the
bitter memory of having its 2011 acquisition of T-Mobile US Inc.
blocked. Its political-action committee has been one of the top
corporate contributions.
Regulators' questions will likely focus on whether AT&T
would favor content acquired from Time Warner, if the merger would
lead to higher prices, or if it would widen the playing field by
making AT&T a stronger competitor.
AT&T will likely have to meet conditions set by antitrust
reviewers at the Justice Department as well as face regulators from
the Federal Communications Commission, who will also likely conduct
a public interest review of the deal.
"Avoiding any kind of regulatory review is always a benefit,"
Mr. Stephenson said. "But we aren't naive. We aren't thinking that
that won't happen."
The Justice Department and FCC both declined to comment.
In the 2016 election, AT&T's PAC has given a total of $4.2
million to hundreds of candidates and groups in both parties,
including $70,000 to a joint fundraising committee for House
Speaker Rep. Paul Ryan (R., Wis.) and the maximum $5,000 to Sen.
Chuck Schumer (D., N.Y.), considered the likely successor of
departing Senate Minority Leader, Harry Reid of Nevada.
It was also a major donor to both political conventions, giving
$1.5 million to the host committee for the Democratic convention
and $4.2 million to the host committee for the Republican
convention.
Mr. Stephenson is a longtime Republican donor. He gave $1,000 to
Mr. Ryan in March, and last December gave $30,000 to the Republican
National Committee, according to Federal Election Commission
records. He supported Republican presidential nominee Mitt Romney
in 2012 and hasn't donated to Mr. Trump.
Time Warner CEO Jeff Bewkes has a far more sparse donation
record. He hasn't donated to any campaigns this election cycle,
according to FEC records.
Media companies and industry rivals such as Walt Disney Co.,
which called for "close regulatory scrutiny" on Saturday, are
expected to lobby for tough conditions that are enforceable, given
the shadow of Comcast-NBCUniversal. Because this deal combines a
content provider and a distributor instead of two direct rivals,
lawyers, lobbyists and regulatory officials say divestitures are
unlikely.
An FCC review could be sticky, especially if the majority of it
is conducted by current Chairman Tom Wheeler, who has proved to be
tough toward the telecom and cable industries. People close to him
note that Mr. Wheeler may end up staying well into 2017 if
Democratic candidate Hillary Clinton wins the presidency.
"AT&T is no stranger to DOJ antitrust review and they are no
stranger to FCC review if that is needed here," said Amanda Wait, a
former Federal Trade Commission lawyer who now practices at law
firm Hunton & Williams LLP.
In 2009, Comcast offered a variety of early concessions such as
increasing children's programming when it acquired a controlling
stake in NBCUniversal, something AT&T did with its DirecTV
acquisition when it was announced in 2014 but not this time with
Time Warner.
Charter Communications Inc., when it scooped up Time Warner
Cable Inc., also announced from the outset it wouldn't impose data
caps on its broadband customers or charge content providers like
Netflix Inc. for traffic handoffs to its broadband network for
several years.
Industry executives believe AT&T will have a hard time
shaking off worries in Washington it would favor Time Warner
content on its vast combined wireline broadband and mobile
footprint.
For Dallas-based AT&T, the task of negotiating Washington
will fall on Robert Quinn, who recently stepped into the top policy
job having worked his way up through the carrier.
His victories include shepherding the AT&T-BellSouth merger
through an FCC commission with two Republicans and two Democrats,
where the tiebreaker Republican had recused himself. The approval
was unanimous.
"He knows how to cut deals and compromise," said Sam Feder, a
managing partner at Jenner & Block LLP and a former FCC general
counsel.
Bob Davis contributed to this article.
Write to Thomas Gryta at thomas.gryta@wsj.com, Shalini
Ramachandran at shalini.ramachandran@wsj.com and Rebecca Ballhaus
at Rebecca.Ballhaus@wsj.com
(END) Dow Jones Newswires
October 24, 2016 07:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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