WASHINGTON — AT&T’s road to approval of its merger with Time Warner Inc. may have gotten a bit rockier last week with the announced Department of Justice lawsuit against both the telco and its DirecTV subsidiary, and by the same team that will be reviewing the proposed deal.
Whether the Federal Communications Commission will get to review the deal remains a question. As Multichannel News pointed out when the merger was announced, the DOJ will review it for antitrust issues, and that review will be led by two officials who, until only a few months ago, were FCC officials dealing directly with merger reviews.
One is Renata Hesse, who succeeded Bob Baer back in April atop DOJ’s antitrust division, and prior to that was a merger adviser to the FCC on such issues as blocking the proposed AT&T-T-Mobile deal.
The other, former FCC general counsel Jonathan Sallet, last week was listed as the lead attorney on the DOJ team that brought the suit against DirecTV and its corporate parent, AT&T; the suit alleges they were the ringleaders in a series of “unlawful information exchanges” in negotiations with Time Warner Cable over carriage of SportsNet LA, the regional sports network managed by the MSO (since acquired by Charter Communications) and owned by baseball’s Los Angeles Dodgers.
AT&T respectfully disagreed with that conclusion and will fight the charges in court even as it tries to get Sallet and company to approve the merger, promising it will deal fairly with competitors over content.
Sallet, now deputy assistant attorney general of the DOJ’s antitrust division, said in announcing the suit, “Competition, not collusion, best serves consumers, and that is especially true when, as with pay television providers, consumers have only a handful of choices in the marketplace.”
One of the key issues in the AT&T-Time Warner deal is access to all of Time Warner’s content and whether AT&T would try to keep it to itself. The companies argue that they will, in fact, make Time Warner content more accessible and become a stronger competitor to pay TV providers, thus expanding that handful of choices with a stronger mobile content offering.
Not surprisingly, one of the groups trying to block the merger, Public Knowledge, used the suit as an argument against the AT&T-TW deal in particular and further consolidation in general.
Adonis Hoffman, former chief of staff to FCC commissioner Mignon Clyburn, said he thinks the deal will go through and noted that having Sallet lead the review team is both a plus and minus for the deal’s prospects.
“Sallet knows his way around these issues, but clearly there is some pretty strong language on behavior that could carry over into the review, if not by him, then by others on his team,” Hoffman said. “But remember, this is the same Jonathan Sallet who approved the AT&TDirecTV merger and Charter-Time Warner Cable merger. So, he is not opposed to mergers and he is a brilliant antitrust lawyer.”
“If allegations of wrongdoing are there for this specific case, that is one thing, but I think Sallet is professional enough to differentiate between alleged bad action with respect to carriage negotiations versus a vertical merger,” Hoffman said.
AT&T and Time Warner certainly hope so.