CPUC Likely To Review Charter/TWC/BHN at Own Pace, Experts Say
Experts believe the California PUC will follow its own schedule, rather than the FCC's shot clock, in reviewing Charter Communications' acquisitions of Bright House Networks and Time Warner Cable. No one expects the deal to be done within the FCC's 180 days, particularly given the volume of data requested by the FCC, Paul Goodman, telecommunications senior legal counsel at the Greenlining Institute, told us. Given the Charter/TWC/BHN size, “this is more like an eight- or nine-month process,” he said, saying the CPUC typically “works hard to match” the FCC schedule. Any California delays (see 1511270047) shouldn’t derail the deal unless Charter starts to see signs federal or state regulators won’t be satisfied with answers or conditions and no sign-off is likely, Goodman said.
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The FCC's 180-day shot clock is unlikely to play a role in whether California gives the deals the green light, said Regina Costa, executive director of California's The Utility Reform Network. She told us that because the CPUC’s process is independent from the FCC’s, it's unlikely its timeline will change. One of the most important roles state commissions play is to develop a good record on the case with information that the FCC may not otherwise obtain because it doesn’t have an evidentiary process that is as robust as states', Costa said.
If the FCC adheres its shot clock on the Charter/TWC/BHN deal -- which is to run out in March -- and if other states finish their regulatory review by then, California’s June date would likely move up because there would be increasing pressure on Golden State regulators, particularly from state lawmakers, said a cable attorney. Having nationwide deals held up by a single state would be largely unprecedented, the lawyer said.
State review processes are a chance to unearth real-life stories about how customers in each state would be affected by a transaction, Costa said. California has specific requirements for deals such as Charter/TWC/BHN, Costa said, and the state is an important market for most national service providers. Because of those reasons, Costa doubts the CPUC will decide before June. “I don’t think that pressure that’s put on by an FCC shot clock is going to change the California timeframe,” she said. “The California commission has the statutory obligation to conduct a proceeding to show that this is in the public interest … so I don’t see them shortchanging that on something as big as this.”
Where states have jurisdiction over a deal, customers are going to come out better than those in states with no jurisdiction, Costa said. Frontier Communications/Verizon California is a prime example of the kind of power California can have on a deal, Costa said. The FCC approved it, but the CPUC developed a robust record of the deal's downsides and then proposed conditions (see 1512030059) to fix them, she said. “It’s a much better transaction for our customers than it would have been had it solely been in the hands of the FCC.”
It wouldn’t be unusual for a large deal to be held up by state regulators, and that outside pressure on PUCs usually carries little weight unless it’s from a highly placed source such as the governor or attorney general, said professor Robert Lande of the University of Baltimore School of Law. “Outside pressure doesn’t do any good; it’s a myth some outsiders think government bureaucrats are sheep and do what they’re told to do. Outside pressure almost never has an effect.” In fact, when the FCC approved the proposed transfer of Verizon wireline systems in California, Florida and Texas to Frontier in September (see 1509030063), it made clear that California and Texas still were doing their own reviews and that it didn't intend its review to “impact the states’ independent proceedings on the proposed transaction, nor do we intend any finding [in the order] to pre-judge the states’ independent consideration of matters before them under applicable state law or precedent, which may differ from our standard of review.”
States can be major roadblocks to takeovers, said Public Knowledge senior attorney John Bergmayer, pointing to the CPUC's having had numerous questions on AT&T’s failed 2011 bid to acquire T-Mobile before the Justice Department ultimately stopped the takeover (see 1108150075). The CPUC also held up Comcast/TWC a while, as a few commissioners there usually focus on California-centric questions such as broadband build-out and regional sports channels, said an attorney representing a third party in Charter/TWC/BHN. “Everyone knows there’ll be some hoo-haw at the state level,” said New York Law School professor emeritus Michael Botein. “That’s just one cost of doing business.”
Given the review process' length, it wouldn’t be surprising for Charter to start talking about the delay in closing affecting the ability of the deals to even happen, said Steven Weissman, former CPUC administrative law judge and now lecturer at the University of California-Berkley Goldman School of Public Policy. Separating out the veracity from the strategic value of those statements can be difficult, he said.
Charter declined to answer questions about the PUC, but in a statement said the transactions “will deliver significant benefits to customers, current and future employees and shareholders. We continue to work with the CA PUC and their staff and remain confident we will obtain all of the approvals necessary for closing in due course."