- Title: AT&T acquisition of Time Warner may avoid FCC oversight - analyst
- Date: 24th October 2016
- Summary: NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) VARIOUS OF TIME WARNER BUILDING NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) (SOUNDBITE) (English) BARCLAYS CAPITAL MANAGING DIRECTOR AND SENIOR ANALYST FOR U.S. TELECOM SERVICES, AMIR ROZWADOWSKI, SAYING: "Well, it's difficult to put specific odds right now. I think that, you know, we're digesting the fact that this was just announced very recently, but I think that, on paper, you know, there is precedent and precedent is, generally, a good framework in terms of providing additional support for regulatory approval. The challenge, of course, is that we're in a different political environment and a different regulatory environment, and so, with this deal being announced, on the eve of an election, and, you know, what type of people will be put in place post that election really will factor into some of the decisions being made about the approval of this transaction." NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) VARIOUS OF TIME WARNER BUILDING NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) (SOUNDBITE) (English) BARCLAYS CAPITAL MANAGING DIRECTOR AND SENIOR ANALYST FOR U.S. TELECOM SERVICES, AMIR ROZWADOWSKI, SAYING: "Well, I think that it is a key consideration. Because when you are looking at the letter of the law really the FCC preview and their ability to look into this is really tied to airwaves and licenses around airwaves. One would suspect that AT&T and Time Warner, in order to get this deal consummated, would look to limit the views of the FCC. And so, I would imagine that they would do what is necessary to make sure that there is something that is, you know, works around that challenge for them." NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) VARIOUS OF TIME WARNER BUILDING NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) (SOUNDBITE) (English) BARCLAYS CAPITAL MANAGING DIRECTOR AND SENIOR ANALYST FOR U.S. TELECOM SERVICES, AMIR ROZWADOWSKI, SAYING: "Well, I think there's heightened level of concern around regulatory environment at this point. I think that there are key questions to the timing and long-term opportunity associated with this. If you think about the merger, in and of itself, this is vertical integration. And so, the opportunity set isn't really on cost-cutting and driving out synergies between the two assets but more longer-term vision in terms of how content is created, consumed, and distributed. And so, I think that the very nature of those elements are long-term in nature, so investors still need time to digest and understand the size and scope of this opportunity." NEW YORK, NEW YORK, UNITED STATES (OCTOBER 24, 2016) (REUTERS) VARIOUS OF TIME WARNER BUILDING
- Embargoed: 8th November 2016 17:42
- Keywords: AT&T Time Warner antitrust U.S. Justice Department U.S. Federal Communications Commission FCC Amir Rozwadowski Barclays
- Location: NEW YORK, NEW YORK, UNITED STATES
- City: NEW YORK, NEW YORK, UNITED STATES
- Country: USA
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00155D7RK7
- Aspect Ratio: 16:9
- Story Text:AT&T may bypass a powerful telecommunications regulator by offloading a Time Warner broadcast station, analysts say, as the telecommunications giant braces for what is expected to be a lengthy and tough antitrust review of its proposed $85.4 billion deal to buy Time Warner.
Dallas-based AT&T said late Saturday (October 22) the deal would need approval of the U.S. Justice Department and the companies were determining which Time Warner U.S. Federal Communications Commission licenses, if any, would transfer to AT&T as part of the deal. Any such transfers would require FCC approval. AT&T has clashed with the FCC in recent years on a number of fronts.
"One would suspect that AT&T and Time Warner, in order to get this deal consummated, would look to limit the views of the FCC," said Amir Rozwadowski, analyst at Barclays Capital. "I would imagine that they would do what is necessary to make sure that there is something that is, you know, works around that challenge for them."
An AT&T spokesman declined on Sunday (October 23) to elaborate on whether the FCC would need to formally approve the transaction.
FCC spokesman Neil Grace declined to comment.
Comcast's 2011 takeover of NBCUniversal - the last marriage of a distribution powerhouse with a major media and content provider, such as AT&T and Time Warner - was reviewed by both the Justice Department and the FCC.
The FCC played a key role in that review and, by a 4-1 vote, approved the deal with significant conditions, some of which last until 2018. The Justice Department has to prove a proposed deal harms competition in order to block it. But the FCC has broad leeway to block a merger it deems not to be the "public interest" and can impose additional conditions.
Despite its big media footprint, Time Warner has only one FCC-regulated broadcast station, WPCH-TV in Atlanta. Time Warner could sell the license to try to avoid a formal FCC review, several analysts said. But, even if AT&T acquires no licenses in the deal, BTIG analyst Rich Greenfield said the FCC still may play an indirect role in the merger review.
David McAtee, AT&T senior executive vice president and general counsel, said in a statement Sunday history is on the company's side in winning approval.
"In the modern history of the media and the internet, the U.S. government has always approved vertical mergers like ours, because they benefit consumers, strengthen competition, and, in our case, encourage innovation and investment," he said.
AT&T, which has repeatedly clashed with the FCC over the past several years over major industry regulations, said on Saturday one benefit to its buying Time Warner is that the programming company is "lightly regulated compared to much of AT&T's existing operations."
AT&T has criticized much of FCC Chairman Tom Wheeler's ambitious proposed agenda, including new broadband privacy regulations, reforms to the $45-billion-a-year business data services market and a plan to allow consumers to ditch pay-TV set top boxes.
AT&T was among those who sued the FCC in 2015 to block the Obama administration's landmark rules barring internet service providers from obstructing or slowing down consumer access to web content.
The FCC proposed fining AT&T's Mobility unit $100 million in June 2015 for misleading customers about unlimited mobile data plans. The FCC has taken no further action to enforce the proposed fine, and the company has it would "vigorously dispute the FCC's assertions."
AT&T and the FCC are working together on some issues. AT&T chief executive Randall Stephenson is chairing a task force to crack down on robocalls after the FCC's Wheeler in July urged new industry action. Both are attending a task force meeting Wednesday (October 26) in Washington.
Experts expect tougher regulatory, political and consumer scrutiny of the deal compared to Comcast's purchase of NBCUniversal.
A U.S. Senate antitrust committee plans to hold a hearing on the new deal in November.
While the Comcast deal offers a potential roadmap for winning approval by agreeing to conditions, it also could lead to tougher and more enforceable conditions that opponents already are demanding.
In 2011, Comcast agreed to 150 conditions, including sacrificing day-to-day control of popular video website Hulu and making NBCUniversal programs available to competitive streaming services. Others were aimed at ensuring Comcast, as the owner of major content from NBC and various cable channels, dealt fairly with rival cable and satellite providers.
Comcast declined to comment Sunday. But, in 2014, the company defended its compliance, saying "Comcast is a company that keeps its promises and plays fair."
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