The landmark $85 billion dollar AT&T/Time Warner merger faces three major obstacles: federal antitrust regulators, a political class rallied by populist fury, and consumers who are generally dissatisfied with their cable providers.
One of the largest roadblocks facing AT&T’s acquisition of Time Warner will be a battle with federal regulators.
The two arms of the government that oversee corporate mergers are the Federal Trade Commission (FCC) and the Antitrust Division of the Justice Department (DOJ). These government bodies thwarted 150 corporate mergers under President Barack Obama’s time in office, compared to 292 under President Clinton and 129 under President Bush.
The arm charged with reviewing the AT&T merger is the DOJ, which shot down eight deals this year, and is currently looking at three more.
Federal Communications Commission (FCC) commissioner Jonathan Adelstein said, “in the end, I think it probably gets done, but I don’t think it’s going to be pretty,” in an interview with CNBC. “The bottom line is it is not that strong of an anti-trust case for DOJ because it is a vertical, not a horizontal merger.”
Recent statements by members of the Senate Committee on the Judiciary, which provides oversight of the DOJ and the agencies under the DOJ’s jurisdiction, do not bode as well for the proposed acquisition.
“The Justice Department needs to carefully scrutinize the merger to ensure that the more than 90 percent of Americans who own cell phones are not harmed by having fewer provider choices. Choices in the marketplace generally spur competition, innovation, and lower prices, and it’s imperative that this choice remains in place for the consumer,” Republican Senate Judiciary Committee Chairman Chuck Grassley said Monday.
On the issue of merger, there is something of a bipartisan consensus. “This proposed massive consolidation of distribution and content raises potentially serious questions about competition…the Senate Judiciary Committee should hold a public hearing on this proposed merger without delay,” added the top ranking Democrat on the committee, Sen. Patrick Leahy.
Rising populist sentiment, championed by both Republican nominee Donald Trump and Democratic Sen. Bernie Sanders from Vermont, will also be a factor in whether the merger comes to fruition.
At a rally Oct. 22, Donald Trump said that the merger stands “as an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.”
On the other side, the beacon of Democratic populism, Sen. Bernie Sanders, tweeted out Sunday evening: “The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people.”
The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people. https://t.co/S8c4ldDqhi
— Bernie Sanders (@SenSanders) October 23, 2016
Outspoken on issues of greed and corruption in the private sector, Sen. Elizabeth Warren told a crowd this summer in a landmark antitrust speech that: “today, in America, competition is dying. Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, threatens our economy, and threatens our democracy.”
Democratic nominee Hillary Clinton’s running mate, Sen. Tim Kaine, joins the chorus of antitrust fervor, recently saying that he has some “concerns and questions,” regarding the deal. Brian Fallon, press secretary and mouthpiece for Hillary Clinton, hinted that Clinton may be weary of the merger, explaining that, “certainly, [Clinton] thinks that regulators should scrutinize it closely.”
The statements by Trump, Sanders, Warren, and members of Clinton’s campaign foreshadow possible death for the would-be merger.
The final monkey wrench for this deal is the massive amount of negative public sentiment among cable TV subscribers. Consumer Reports surveyed in excess of 172,000 subscribers about their experience with home internet, pay TV, and telephone service. Consumers of cable TV showed broad dissatisfaction with their cable TV and internet plans, according to the survey.
Even more interesting, Time Warner Cable would have been at the bottom of the ratings for cable TV if it were not for their communications firm, the survey found. Time Warner Cable experienced over a 6 percent decline in customer satisfaction since 2001. AT&T remains relatively stable among the top media companies, touting a 69 percent customer satisfaction rate.
If the merger survives these three obstacles, it is expected to take effect in 2017.
Send tips to robert@dailycallernewsfoundation.org
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.