Senators Call On AT&T And Time Warner To Explain How Merger Will Benefit Americans

During the campaign, then-candidate Donald Trump talked openly about putting a halt to the pending merger of AT&T and Time Warner, he has since appointed an FCC Chairman who has historically been pro-merger. That’s why a handful of Senators have called on the two companies to explain how this consolidation will be in the public interest.

The issue of public interest is one that the FCC usually tackles in its review of telecom-related acquisitions, but it’s also one that could get short-shrift under the new administration — or possibly ignored if AT&T has its way.

AT&T recently claimed that it believes it can avoid all FCC scrutiny of the deal because it says that Time Warner’s few current FCC licenses will not be transferred to AT&T as part of the merger. No licenses equals no FCC review, according to AT&T’s way of thinking.

In response to that claim, Sen. Al Franken (MN), and a dozen other members of the Senate, fired off a letter [PDF] to AT&T CEO Randall Stephenson and Time Warner CEO Jeff Bewkes, asking them to respond to some of the concerns that would have been raised by an FCC investigation.

“To achieve greater transparency for regulators, lawmakers, and American consumers, we ask that you provide us with a public interest statement detailing how you plan to ensure that the transaction benefits consumers, promotes competition, remedies all potential harms, and further serves the public interest through the broader policy goals of the Communications Act,” explains the letter.

The Senators note that the two CEOs testified before the Senate Judiciary Committee late last year, but that there are still questions about this merger.

“[W]e remain concerned about how a deal of this size could affect consumers and competition,” write the Senators. “AT&T is already the world’s largest pay TV provider and the largest telecommunications company. Combining it with one of the world’s largest producers of content gives AT&T-Time Warner both the incentive and ability to use its platform to harm competitors, and as a result, consumers. The combined company could promote its own programming above that of other content companies’ or restrict other distributors’ ability to offer its highly-desired content. As a result, the merger could raise prices on consumers, reduce access to independent programming; and harm small businesses, content distributors, and innovative business models.”

The letter puts a deadline of Feb. 17 for the two companies to respond, though there is really no penalty if the CEOs ignore the request or provide little useful information in response.

We’ve reached out to both AT&T and Time Warner for comment, but have not yet heard back.

Meet The New Boss

Even if AT&T is wrong about being able to avoid FCC scrutiny entirely, the merger is still likely to be treated with a soft touch, with little consideration given to the “public interest” question.

During his tenure with the FCC as a Commissioner, new Chairman Ajit Pai has repeatedly criticized the agency’s efforts to address the public interest issue by requiring that merger partners agree to conditions intended to to provide a net positive benefit to the consumer.

Even when the FCC approved mega-mergers, Pai was disappointed that the Commission had looked at anything other than the dollars and cents of the deal.

With regard to the 2015 merger of AT&T and DirecTV, Pai argued — after the deal was okayed by the Commission — that “The transaction’s benefits clearly outweigh any harms. As a result, there is no need to impose conditions upon it.”

He then went on to say that the conditions placed on that merger had “nothing to do with the transaction at hand,” but were the “forced tribute that the company must offer to mollify the Capitol.”

Pai went even further last year, after the FCC approved the merger of Time Warner Cable and Charter, calling the Commission’s merger review process “badly broken” and rife with “fact-free, dilatory, politically motivated, non-transparent decision-making.”

He called on Congress to implement major reforms so that the FCC would be more limited in the scope of its review, much like the Justice Department’s Antitrust Division can only take certain considerations into account when looking at a proposed merger.

Now that he’s actually steering the Commission, which has gone from a 3-2 Democrat majority to a 2-1 Republican majority in just a matter of weeks, it’s doubtful that Pai will suddenly change his tune on reviewing mergers.