The 2016 presidential election cycle is considered to be one of the most divisive in recent American history. Yet the announcement of the $85-billion merger between the telecommunication giant AT&T and Time Warner seems to have worked out a miracle: in an unusual spark of opposition across the board, the deal was criticized by both sides of the political spectrum.
While delivering a speech in Gettysburg, Republican candidate Donald Trump said he would block the AT&T-Time Warner merger if elected at 1600 Pennsylvania Av.
Trump labeled the deal as a poison for democracy arguing that too much concentration of power in the media industry can create the conditions to manipulate people. The Republican candidate went even further saying that he would break “that deal up and other deals like it,” referring to the Comcast-NBC Universal completed in 2013.
In the democratic field, while Hillary Clinton didn’t comment directly on the merger, vice presidential nominee, Tim Kaine, expressed concerns about the deal saying that “less concentration […] is generally helpful, especially in the media.” Words that echo those of democratic Sen. Al Franken who said that the deal would bring about “higher prices, fewer choices, and even worse service for Americans.”
In a matter of hours the deal quickly became a hot-topic election issue as Jim Nail, the principal analyst at Forrester Research, points out: “if the deal doesn’t go through it is purely about politics, opposition to big corporations is the Zeitgeist of the moment,” Nail said.
Nail explains that the deal is actually “fascinating” as it represents an excellent fit for the way the world is evolving. Matching an excellent content producer such as Time Warner with AT&T’s capillary distribution infrastructure – and advanced advertisement technology – is a winning combination.
Also, using its telecommunication infrastructure AT&T can acquire better data insights by which they can create better content and more targeted advertisement. It is not clear how much profit this can bring into the AT&T pockets.
However question about the possible control on content especially through distribution over the wireless data network is not mundane: according to the principle of net neutrality AT&T shouldn’t give preference to its entratainment products over other content providers. But previous cases involving all the major distributors proved difficult to technically enforce this principle.
“A groundswell of opposition to further concentration in the U.S. economy has been rising, aided by intellectual support for the view that we have gone too far, and increasing mistrust of large corporations,” said Howard A. Chernick, professor of economics at CUNY Hunter College. Chernick himself is suspicious of the deal but more than for concerns on net neutrality “for its effect on prices of services, personal liberty, and reduced bargaining power of workers.”
Chernick also points out the peculiarity of the timing for the acquisition announced just a few day prior to election-day: “Undoubtedly, there was a political timing issue in the recent AT&T- Time Warner merger. In a period of political and policy uncertainty regarding the vigor with which the U.S. pursues antitrust activity, key players apparently felt that there was more chance of success if the deal could be presented before the election,” the professor says.
The real question is now about who can actually be able to torpedo the merger and the answer is straightforward: the Justice Department and the Federal Communications Commission will have to work out the details and possibly impose regulation in the deal.
To actually block the deal the Justice Department has to prove that the merger harms competition. It is the FCC that has a wider discretion as the agency is in charge of evaluating whether or not the deal is in the public interest.
But the FCC will have the authority to review the deal only if FCC licenses are involved in the merger; for this reason AT&T is trying to dodge the FCC tough scrutiny by avoiding acquiring the FCC license owned by Time Warner. “AT&T and Time Warner are currently determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction,” said the company in a press release.
Despite political speculation and general anxiety among analysts, ultimately, just the antitrust authorities will have the power to kill the deal and, as usual, the battle will be fought over the details.