AT&T/TW Attracting Early Criticism From Trump, Markey, Free Press; Companies Announce $109 Billion Deal

"The new company will deliver what customers want -- enhanced access to premium content on all their devices, new choices for mobile and streaming video services and a stronger competitive alternative to cable TV companies," the companies said. Cable lawyers had told Communications Daily (see here) Friday that such a deal would face DOJ and possibly FCC review. The experts said AT&T/TW would raise a number of regulatory concerns.

“In the telecommunications market, we need more competition, not more consolidation," said Sen. Ed Markey, D-Mass. "Less competition has historically resulted in fewer choices and higher prices for consumers, and this deal should be assessed with consumers, competition and choice in mind," Markey said, adding he plans "to carefully review" whether any AT&T/TW would be in the public interest. He said such a deal would reinforce the need for the FCC to adopt broadband privacy rules at Thursday's commissioner meeting, saying a combination "could increase AT&T's opportunity to collect and use personal and sensitive information about American consumers. With strong broadband privacy rules in place, ISPs like AT&T and others would be required to receive consumers consent before sharing their personal information with advertisers and other third-parties."

"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN," Trump said in a speech Saturday, reported CNN. It's "a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he reportedly said. Trump also said if elected, his administration would look at breaking up Comcast/NBCUniversal. The campaign didn't comment.

"As the FCC has found in past mergers, combining valuable content with pay-TV distribution causes harm to consumers and competition in the pay-TV market," said American Cable Association CEO Matt Polka in a statement. He said AT&T/TW should get particular regulator scrutiny of vertical integration issues. AT&T and Time Warner didn't comment Saturday evening on deal concerns. DOJ didn't reply to a query and an FCC spokesman declined to comment.

Free Press Policy Director Matt Wood in a statement said "big mergers like this inevitably mean higher prices for real people to pay down the money borrowed to finance these deals and compensate top executives. Just as AT&T's recent purchase of DirecTV was quickly followed by price hikes, there's every reason to expect this proposed tie-up would cost internet users and TV viewers dearly, too." Free Press also applauded current net neutrality rules "even though companies like AT&T continue to test those rules in the market, threaten them in Congress and challenge them in the courts." It said minus antitrust and nondiscrimination rules, AT&T would "deny programming to other distributors and favor their own content -- slashing their own costs but without passing any of those savings along."

Not all opposed the deal before it was announced. "Any deal of that size deserves close scrutiny by the Department of Justice and the FCC and I am in favor of such scrutiny, but I think it's wrong to reflexively oppose any merger like this," said Free State Foundation President Randolph May. "I remember very well when AOL and Time Warner proposed to merge," he said of that deal, consummated more than a decade ago, when Time Warner then also owned Time Warner Cable, now part of Charter Communications. "Immediately, that merger was opposed by some of the very same groups or people that I am sure are now coming out against this merger; we all know how that merger turned out." AOL now is a part of Verizon. "It's likely that this merger will likely end up being pro-competitive," said May in a phone interview.

Analysts continue to be uncertain if DOJ and the FCC would OK AT&T/Time Warner. It's "incredibly difficult" to say if regulatory approval would occur, BTIG's Richard Greenfield wrote investors Saturday, noting it's unclear who would run the agencies post-election. Greenfield said DOJ and FCC concerns led to Comcast abandoning its plan to buy TWC, before Charter bought it. "In our view, regulators will fear that AT&T will use its distribution footprint to favor Time Warner content vs. third-parties. Not to mention, Time Warner just invested in Hulu, which is one of the lightning rods that regulators have focused on as an example of Comcast’s bad behavior with NBC," wrote Greenfield. "Looked at through the Comcast/NBC lens, it is easy to see how the government could block the transaction, with AT&T now the largest MVPD (more video subs than Comcast), in addition to being the second largest wireless broadband provider," he wrote of multichannel video programming distributors. "Regretting the approval of Comcast/NBC does not mean there is a clear legal basis for blocking that transaction. ... AT&T’s wired broadband market share using the 25 Mbps FCC standard is insignificant on a nationwide basis, and in wireless broadband it faces robust competition from three other providers across the entire country. ... In that light, we can see how an AT&T Time Warner transaction could easily be approved."

New Street Research analyst Jonathan Chaplin said a transaction likely will get regulators' nod -- "it will be tough for the DOJ to convince a judge that [Comcast/NBCUniversal] harms could be cured with conditions but [AT&T/TW] harms cannot" -- and that it very well could avoid FCC review, "which limits the remedies available to negotiators." Chaplin said AT&T/TW likely would preclude the telco ISP from getting any kind of regulatory approval to buy Dish Network anytime soon, taking pressure off Verizon to have to move quickly on any plans it might have for Dish.