AT&T/DirecTV Not Seen Going Way of Comcast/TWC
The proposed purchase by AT&T of DirecTV is likely to be approved by the FCC and the Department of Justice, despite those agencies’ stance against Comcast/TWC, industry analysts and officials said in interviews. AT&T/DirecTV doesn’t have the issues of past performance on merger conditions or the online video foreclosure that bothered regulators about Comcast/TWC, industry officials and analysts told us. “The concerns about Comcast percolated throughout the D.C. atmosphere while we have not heard such concerns raised by opponents in the AT&T deal,” New Street Research analyst Jonathan Chaplin said. Several analysts told us last week that regulators are likely to block deals that lead to the creation of multichannel video programming distributors smaller than Comcast’s current size.
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The sudden ending to Comcast/TWC frees up FCC staff to focus on AT&T/DirecTV, which will hasten completion of the review, Chaplin said. Other communications officials said FCC staff and deal opponents being freed up by the demise of Comcast/TWC could lead to more scrutiny of AT&T/DirecTV. The FCC and the public interest groups have limited resources, and many opponents of Comcast/TWC are also opponents of AT&T/DirecTV, one industry official pointed out. Public interest group Consumer Watchdog urged the FCC to block AT&T/DirecTV just hours after Comcast/TWC had officially collapsed. “The failure of the Comcast-Time Warner deal should similarly seal the fate of the AT&T DIRECTV proposal because that consolidation would give too much power over the market to the new behemoth,” Consumer Watchdog said in an emailed statement. AT&T and DirecTV declined to comment.
Such opposition is more likely to lead to stiffer conditions for approval of the AT&T deal than to rise to the level of blocking the merger, several communications industry attorneys told us. Public Knowledge and Dish Network have both listed concerns about the AT&T deal in filings in docket 14-90, but both entities also have suggested conditions for approval, a concession they explicitly refused to make for Comcast/TWC. The level of opposition facing AT&T is less than what faced Comcast, communications attorneys told us.
The political optics of blocking one merger shortly after another may or may not be a factor at the FCC, industry officials said. It’s widely seen as not likely to affect the DOJ’s merger review process, but some said concern about being perceived as universally opposed to consolidation could lead FCC Chairman Tom Wheeler to approve AT&T/DirecTV on the heels of denying Comcast. Conversely, Wheeler may not want to appear inconsistent by approving one deal and denying another, industry attorneys said. The politics aren’t clear, one industry official told us.
The FCC’s blocking of Comcast/TWC could be seen as “indicative of a new and saner approach when it comes to consolidation,” said former FCC Commissioner Michael Copps, the lone commissioner to oppose the Comcast/NBCU merger. Copps now works with Common Cause, which filed in opposition to both Comcast/TWC and AT&T/DirecTV. The public's rising scrutiny of telecommunications as demonstrated by the comments on the net neutrality and Comcast proceedings shows that there's political will against communications consolidation, Copps said. “I think the bar is raised by the attention of the American people on this,” Copps said.
Though Chaplin and other analysts have predicted a flurry of mergers and acquisitions following the Comcast/TWC collapse, a pending decision in the U.S. Court of Appeals for the D.C. Circuit could slow AT&T’s merger review proceeding, and has stopped the FCC’s shot clock for the deal. A group of content companies including CBS and Viacom challenged the FCC’s plans to release confidential contract information in both the AT&T and Comcast proceedings. Though the decision is moot for Comcast, it still applies to AT&T, and several industry officials familiar with the proceedings have told us the FCC would be unlikely to approve a merger without waiting for that case to be resolved. If the FCC wins, there would likely be an additional delay to allow parties in the merger proceeding to examine the contract data, we were told (see 1504130051).