Analyst: Something Has Got To Give

Moffett Says Number of Deals Could Force FCC’s Hand

The rising number of media mergers expected to fall on the Federal Communications Commission’s doorstep could force the regulatory agency to consider blocking at least one of the mega-deals before it, influential media analyst Craig Moffett wrote Tuesday.

At least three big potential deals have surfaced in the wake of Comcast’s February announcement that it would acquire Time Warner Cable for about $69 billion AT&T’s $67 billion buyout of DirecTV; SoftBank’s potential acquisition of rival wireless carrier T-Mobile and 21st Century Fox’s $80 billion overture to Time Warner Inc. While SoftBank hasn’t officially made an offer for T-Mobile and Time Warner rebuffed the Fox offer, most analysts consider the media behemoths to be in play.

In his report, Moffett noted that all of those deals – and probably several more that haven’t been announced yet – trace their reason for being to the enormous scale and power that Comcast/TWC will have over the television and broadband industry. And that, Moffett wrote, is why at least one of them could be blocked by the agency.

“All these deals create an obvious problem for policy makers,” Moffett wrote.  “Media consolidation is always unpopular, and all the more so now when merger mania has seemingly run amok and when press attention to Net Neutrality has inflamed distrust.  The anti-trust case against any one of the recent spate of mega-deals is perhaps less important than the gestalt... the already-big are getting bigger.  The DOJ and/or FCC will be under tremendous pressure to block at least one of the mega-deals lest they be viewed as being asleep at the switch.”

But which one will get the boot? Moffett isn’t speculating –he added that the anti-trust case against Comcast/TWC is weak, the companies’ footprints don’t overlap and no competitor would be eliminated. But he noted the combined company would control about 40% of the broadband customers in the country, a figure that could raise eyebrows.

Moffett notes that the current FCC Net Neutrality debate could provide some help. FCC Chairman Tom Wheeler clearly does not want to reclassify broadband as a Title II service, which could create a world of unintended regulatory consequences.  At the same time he can’t ignore cries from the left which have been vehemently opposed to his call to allow for paid prioritization.

“Conditions on Comcast (and AT&T) could provide the deal compromise,” Moffett wrote.