Only one regulatory hurdle looms for AT&T-Time Warner deal

by Steve Blum • , ,

Clearing it is not a given, though.

AT&T’s bid to acquire Time Warner has little direct effect on the broadband industry, but the indirect effects have set off anti-competitive alarm bells. Compared to other recent mega-deals, though, there will be relatively little regulatory review of the transaction.

Time Warner already spun off its cable systems into an independent company, which was snapped up by Charter Communications earlier this year. That followed a similar, unsuccessful attempt by Comcast. Both deals triggered reviews by the California Public Utilities Commission, the Federal Communications Commission, and the federal justice department’s anti-trust team. Comcast’s purchase of Time Warner was scuppered by the FCC and the federal justice department; Charter successfully ran that gauntlet. As did Comcast when it took control of NBC Universal, at least at the federal level.

But AT&T is in much different position. Time Warner is a content company. It doesn’t own any regulated telephone subsidiaries, which is what caused the California Public Utilities Commission to become involved in the Charter and Comcast transactions. It does own one television station, WPCH-TV (formerly WTBS-TV) in Atlanta, and the FCC would have to approve any change in ownership, but that might be finessed. According to the joint statement issued by the two companies on Saturday

AT&T and Time Warner are currently determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction. To the extent that one or more licenses are to be transferred, those transfers are subject to FCC review.

Translation: we don’t want the FCC coming anywhere near this deal, so we will try like hell to figure out some other way to get rid of the television station.

The justice department will do a standard, anti-trust review and, likely, impose conditions that’ll be limited to direct, competitive issues like exclusivity of its programming or zero rating the bandwidth that mobile subscribers consume to watch it. Or it could simply kill the deal on the grounds that the anti-competitive harm is beyond mitigation. But at this point, that’s not the way to bet.