AT&T’s $85 billion bid to acquire Time Warner Inc. is facing a serious hurdle in a potential FCC review, but AT&T thinks that regulatory process won’t be necessary.
According to an SEC filing, AT&T is anticipating that Time Warner won’t have to transfer any of its FCC licenses following the completion of the acquisition. Although, the company notes that its conclusion is subject to change.
The FCC licenses in question, which cover Time Warner businesses including HBO and CNN, cannot be transferred to AT&T without the FCC’s consent. By AT&T signaling that no license transfer will have to take place, it indicated that the companies can bypass the FCC’s public interest review altogether. That would mean the companies need only the Justice Department’s nod of approval to clear regulatory reviews.
The potential for skipping an FCC review represents a stark turnaround from comments AT&T CEO Randall Stephenson made last year, when he told the Wall Street Journal that the chances of getting around the FCC were slim. “Avoiding any kind of regulatory review is always a benefit,” Stephenson told the Journal. “But we aren’t naive. We aren’t thinking that that won’t happen.”
When the merger was announced in October last year, many speculated that the deal could avoid an FCC review as long as Time Warner divested its FCC broadcast license held by Turner in Atlanta. If AT&T’s latest disclosure is any indication, though, that may no longer be the case.
While skipping the FCC’s stringent review seems like a boost to the chances of the AT&T-Time Warner deal getting done, some in the industry have suggested that an FCC review could actually help.
When analyst firm MoffettNathanson interviewed various industry experts back in November to get a feel for how likely the merger was be approved, some of the responses illustrated scenarios where the FCC’s involvement could increase the likelihood.
“The irony is that having the FCC review the proceeding may increase the chance of getting the deal done,” said one source. “The DOJ generally does not like behavioral remedies but has relied on existence of such conditions in an FCC order. If the FCC cannot condition the approval, the DOJ will have [fewer] tools to get to yes…”