New FCC Chairman Ajit Pai said he too believes his agency won’t be reviewing the proposed $85 billion merger of AT&T and Time Warner Inc. Pai told the Wall Street Journal that, since the companies put together the deal so that no FCC licenses need to be transferred, the FCC won’t be involved.
The news from the FCC chair caused Time Warner’s stock to climb more than 1% today.
The apparent confirmation from Chairman Pai reinforces what AT&T and Time Warner have already said in regards to an FCC review. In an SEC filing last month, the companies indicated that an FCC review wouldn’t be necessary since no licenses would be transferred.
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.
Perhaps as a further measure to ensure the companies can dodge the strict scrutiny of an FCC review, Time Warner last week moved to sell off its FCC-regulated broadcast station in Atlanta. According to an FCC filing spotted by TVNewsCheck, broadcast group Meredith is buying the station for $70 million. As the report pointed out, Meredith has been operating the station through an agreement with Turner since 2011.
Seemingly out from under the public interest purview of the FCC, AT&T and Time Warner have been busy fending off questions from lawmakers who are concerned about the merger’s potential for deflating competition.
The companies last week wrote a letter to a group of Democratic senators to explain that the merger will better position them to compete on a nationwide basis with cable companies by offering more programming options at more attractive prices. AT&T noted DirecTV Now as an example of that, but promised there is more to come in terms of innovation and experimentation for video services.
In addition to outlining potential benefits for consumers, AT&T and Time Warner also claimed that their merger won’t affect competition because the companies “do not compete with each other in any significant respect.”
“This is a classic ‘vertical’ merger between two companies with complementary production and distribution assets. This merger thus presents none of the standard concerns raised by merger between competitors. Such ‘horizontal’ mergers trigger scrutiny in concentrated markets because, under certain conditions, the elimination of a competitor can lead to higher prices,” the companies wrote.