Time Warner & AT&T Merger
Written by: Ronald Balatiu
On October 22, 2016 At&T agreed to purchase Time Warner for $85 billion, one of the most expensive mergers in recent history. As with all major mergers, monopolistic motivation is always a concern, and thus the corporations meet the hand of government legislation: the FCC and the DOJ. The FCC has the power to block mergers if they “do not benefit the public”;using this abstract concept of “public record” as evidence, they hold the final say on the transfer of FCC licenses, and therefore hold the say on the merger. The DOJ is much more structured as they have the burden of proving any breach of anti-trust regulation; they create internal investigations to determine the final outcome. The FCC is only involved when the transfer of an FCC license is part of the deal; in cases where both groups are involved in a merger, they both must give approval for everything to go through.
In this specific case, it seems unlikely that the deal will get past the FCC. Historically, At&T has a poor record with the FCC, constantly criticizing any regulatory moves and sued the FCC in 2015 in an attempt to block Net Neutrality legislation. The FCC fired back, in 2015 threatening to fine the media giant $100 million for “misleading consumers” through either false claims or false advertisement; in a scenario where the FCC’s ruling is backed less by fact and more by “public record”, a poor history can only do harm. Furthermore, the benefits of vertical integration would be at the heart of the debate within the DOJ — by having DirecTV Now (a new streaming service) work directly with At&T, a deal could be struck where streaming DirecTV would not affect At&T customer’s data plans, effectively giving an unfair advantage to both the streaming service and mobile provider. Furthermore, by capturing Time Warner, there is a fear that their channels and shows will no longer be available on any other service, creating a similar situation with the current cable market.
Overall, markets are uncertain on how to react to this big news, if it will actually go through at all. All we can do now is speculate, but based on initial predictions, this merger is going to be left dead in the water.
