AT&T-Time Warner Merger: 4 Obstacles Faced as a Battle for Trump's Blessing Begins

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Hearings kick off for the $85.4 billion deal as it confronts intense scrutiny from lawmakers and an unexpected president, who has previously pushed back against the proposal as "too much concentration of power in the hands of too few."

When the Senate Judiciary Antitrust Subcommittee summoned the CEOs of AT&T and Time Warner to testify Dec. 7 about their proposed merger, it mistakenly sent an invite to former Time Warner Cable CEO Robert Marcus. Time Warner CEO Jeff Bewkes later was invited, but the error might be a metaphor for the intricacies and confusion surrounding the planned $85.4 billion deal.

Now Bewkes and AT&T CEO Randall Stephenson are beginning the long process of government approval under an Obama administration, but will conclude it under President-elect Donald Trump. During his campaign, Trump called AT&T-Time Warner "a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." But Bewkes told Wall Street analysts Dec. 6 that "when it becomes clear what we're doing, it will become clear to everyone that it will be pro-competitive, pro-consumer and improve competition in advertising."

Here are four top obstacles AT&T and Time Warner face:


AT&T's lobbying apparatus is legendary. It spent $12.7 million in 2016, about six times what Time Warner spent. But the telecom noticeably was biased against Trump: Its employees and PAC gave his campaign $22,219 compared with $289,931 for Hillary Clinton. If Trump's initial Cabinet appointments are any indication, he doesn't forget his friends and foes. Further, Trump has accused Time Warner's CNN of unfair coverage (though he has close ties with its leader, Jeff Zucker). AT&T's 100 lobbyists, therefore, have some serious fence-mending ahead. Trump's objections, though, are meaningful due to optics more than process, says Tomer Sade, CEO of Wise Data Media. "It absolutely means something as consumers are eager to find out what happens next," he says.


Beyond convincing the Federal Trade Commission and senators — including liberal antitrust subcommittee member Sen. Al Franken, D-Minn., who has said he is "skeptical" — the companies must woo the Department of Justice. (It's unclear what Trump nominee Sen. Jeff Sessions, R-Ala., thinks of the deal.) "We have seen Trump say one thing and do another, so it's not clear what will happen at the FTC," explains Aija Leiponen, professor of economics at Cornell University. The FCC also would need to bless a merger if it involves the transfer of broadcast licenses, though Time Warner likely will sell its lone TV station, thus avoiding such scrutiny. And even then, the FCC might choose to weigh in with a nonbinding opinion.


Similar to Comcast's 2013 purchase of NBCUniversal, lawmakers may demand the companies recommit to diversity, including more nonwhites in executive ranks, movies and TV shows. Worse, the committee might choose to punish AT&T and Time Warner for the relative inaction by Comcast on those promises. Activists such as Al Sharpton and Jesse Jackson likely will weigh in, as they did with Comcast-NBCU.


On Nov. 30, AT&T launched DirecTV Now, a streaming TV service that will be "zero rated" for AT&T customers, meaning they won't be charged for the extra data used to watch content on mobile devices, while customers of other services will. The deal has little to do with the service, notes former FCC official Fred Campbell, now a director at Tech Knowledge, but net neutrality advocates will object. He says: "If you're opposed to the merger and the facts and laws aren't on your side, you look for a popular hook. With zero rating, you've got some built-in noisemaking."

A version of this story first appeared in the Dec. 16 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.