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Consensus among US commentators is that the $85 billion+ tie-up will face a tough regulatory battle with corporate opponents and consumer groups complaining the new group will wield too much market power.
The deal will be the first and big test of the next president’s antitrust policy. Donald Trump he would block the deal if elected president. Tim Kaine, Hillary Clinton’s running mate, told NBC he shared concerns, saying “less concentration I think is generally helpful, especially in the media”.
The purchase faces at least a year of regulatory scrutiny.
Randall Stephenson, AT&T’s chief executive, expressed confidence that the deal would be approved, saying there was no overlap between the two businesses. “This is not a horizontal deal. This is a vertical merger,” he said. “You would be hard pressed to find examples where vertical mergers have been blocked.”
The Comcast-Universal tie up is the obvious precedent; in the end, the Justice Department and the Federal Communications Commission approved the deal requiring some small management concessions but few divestitures. But AT&T and Time Warner will probably face a much sterner test as with a huge wireless business too, the combination would be a new kind of media leviathan.
AT&T will be viewed with particular scrutiny because of the company’s acquisition of DirecTV in July 2015. The deal made AT&T the largest paid-television provider in the nation, with more subscribers than Comcast. After a string of telecommunications mergers during the Obama administration, including Charter Communications’ acquisition of Time Warner Cable, which was approved this year, consumer interest groups have complained that there are fewer options for customers to choose from.
Those deals were known as “horizontal integration” because similar businesses merged. AT&T’s proposed acquisition of Time Warner, however, is considered “vertical” because the two companies largely do not compete against each other but operate on the same supply chain.
Still, regulators may look at other ways AT&T could affect the media ecosystem if the deal is completed. AT&T could make it more expensive for its competitors to gain access to Time Warner’s content or give preferential treatment to its own programming, said John Bergmayer, senior counsel at Public Knowledge, a digital rights advocacy group.
The merger would make AT&T unmatched in its size and reach to consumers through smartphones, home broadband, satellite television and a broad portfolio of cable channels and movies.