AT&T-Time Warner Merger: FCC Chairman Doesn't Expect To Review Deal

On stage at Mobile World Congress in Barcelona, Spain on Monday, Federal Communications Chairman Ajit Pai announced that he doesn’t expect the commission to review AT&T’s purchase of Time Warner.

During an interview at the event, Pai revealed it is his understanding that the massive corporations have excluded any transfer of airwave licenses in their agreement, allowing the merger to duck oversight by the commission.

“That is the regulatory hook for FCC review,” he said, referencing the sale of wireless licenses. “My understanding is that the deal won’t be presented to the commission.”

Without FCC eyes on the merger, the deal will only be subject to review by the U.S. Department of Justice, which is believed to likely approve AT&T’s purchase. The Department of Justice performs an antitrust review, which is generally more narrowly focused and places less scrutiny on a deal than a review from the FCC.

Last week, Time Warner agreed to sell off its Atlanta television studio for $70 million to Meredith—an American media company that owns dozens of websites and local radio and TV stations—in order to avoid prompting FCC review.

"It’s an odd and potentially troubling precedent for AT&T to structure this deal to evade regulatory review," John Bergmayer, senior counsel at Public Knowledge, told International Business Times.

"The FCC’s public interest review standard plays a valuable role in consumer protection and ensuring competition. However, it is unlikely that many other mergers will have the unique facts that allow this structuring. In the meantime, we expect the Department of Justice, Congress, and states to give this deal the close scrutiny it deserves."

Pai’s approach to the proposed merger is a marked departure from the FCC under Tom Wheeler. Prior to stepping down at the start of the Donald Trump administration, Wheeler took an active role in blocking similar deals, including Sprint’s attempt to purchase T-Mobile in 2014 and Comcast’s deal for Time Warner Cable in 2015.

It is believed that Wheeler would have attempted to review the AT&T purchase of Time Warner if he was still chairman. Mignon Clyburn, the lone Democratic commissioner still at the FCC, said last week that the regulatory body has the right to examine the merger, which she called “is ripe for review just by its scope and significance.”

Clayburn argued that if AT&T was confident the merger would be in the public’s best interest, the company “should welcome FCC review.” AT&T has suggested its ownership of Time Warner will be of benefit to consumers as it will be able to offer “more relevant advertising” in ad-supported videos.

Wheeler and AT&T were in a bit of a war of words come the end of the former FCC chairman’s term, with Wheeler calling out the telecommunications company for its practices that violate net neutrality. AT&T responded by dismissing the charge.

AT&T was reportedly convinced after meeting with the transition team set up to staff the Trump White House after the election that its purchase of Time Warner would go off without a hitch.