FCC Hits Pause Button On Mergers Involving Comcast, AT&T
The government has paused its review of two deals that could reshape America’s media and telecom landscapes, seeking details about secret contracts between content providers and merger applicants Comcast and Time Warner Cable, along with AT&T and DirecTV.
The Federal Communications Commission on Wednesday published a notice that it had stopped its informal 180-day “shot-clock” review schedules for the two mergers. The commission cited concerns voiced in public comments that wanted more transparency about the contracts.
At issue are deals between the merger applicants and content providers, including CBS Corp. and The Walt Disney Company. Those businesses want the contracts kept under wraps, saying that making them public would compromise their ability to compete with rivals.
“We agree with these commenters that their current inability to review highly confidential Information that has been submitted in these dockets significantly hampers their ability to meaningfully comment and participate in these proceedings,” said FCC Media Bureau Chief William Lake in the notice pausing the merger reviews.
The FCC uses an informal schedule of 180 days to analyze mergers, weighing issues of competition against customer benefits. The reviews can be paused, however, if officials decide they need to look at a transaction more closely. The Department of Justice also reviews proposed mergers to determine if they comply with antitrust laws.
Significant deals, such as the commission’s 2011 review of Comcast’s bid to buy NBCUniversal, have been paused for closer review, so the pending mergers could still be completed by early 2015 as originally anticipated. But the Comcast-Time Warner and AT&T-DirecTV deals are very politicized during a time of rapid media consolidation.
Consumer advocacy groups like Public Knowledge along with Democratic members of Congress like Sen. Al Franken of Minnesota warn that both the Comcast and AT&T deals would leave customers with fewer options and make it impossible for smaller rivals to compete.
DirecTV is a nationwide competitor with AT&T in online video; their merger would serve 26 million Americans and reduce the number of providers in the sector. A merger of Comcast and Time Warner Cable would also create an Internet juggernaut that would serveapproximately 40 percent of U.S. households subscribing to broadband.
Regulators gave Comcast permission to merge with NBCUniversal in 2011- but only after 234 days of review and with numerous conditions to give the deal more of a public interest benefit that would alleviate competition concerns by making its services more effective. Conditions included a promise to uphold net neutrality and not tamper with rival Internet content on its networks.
Comcast may have to gain more favor with the FCC once again to secure approval for a merger with Time Warner Cable, says Glenn Manishin, an antitrust attorney with the law firm of Troutman Sanders. Manishin represents the Sports Fans Coalition, which opposes the merger.
“The FCC’s action to suspend review and pause its informal ‘shot clock,’ thus extending indefinitely the last round of comments, clearly signals that the merging parties have not been sufficiently transparent,” Manishin says. “The likelihood of the Comcast merger being approved by the FCC and the DOJ without substantial conditions or divestitures appears quite low.”
AT&T may also up the ante on transparency, divestitures and public interest conditions to convince regulators to resume and approve its merger review. The telecom giant withdrew its bid to buy T-Mobile in 2011 when it failed to convince regulators the deal was in the public interest, so it may take extra steps to avoid another defeat.