US Senate Democrats led by Al Franken (D-Minn.) yesterday challenged AT&T to prove that its proposed purchase of Time Warner will benefit the public interest. Franken’s letter comes as AT&T attempts to avoid a Federal Communications Commission review of its $85.4 billion Time Warner purchase. In an FCC review, the company would have to file what’s known as a “public interest statement.” This detailed document—the one AT&T filed for its DirecTV purchase was 349 pages long—is meant to prove that a merger is good for the public instead of merely being good for the merging companies.
But AT&T and Time Warner only have to seek an FCC review if Time Warner transfers FCC licenses to AT&T, and the companies have been working up a plan in which Time Warner would transfer or sell those licenses to someone else.
Franken isn’t happy about that. His letter, cosigned by 11 other Democrats and Sen. Bernie Sanders (I-Vt.), asked AT&T to provide a public interest statement even if the company skips an FCC review.
“By divesting the relevant licenses, AT&T and Time Warner will no longer have the legal burden of proving that the proposal would serve the public interest, and the public is left largely in the dark about how the deal would impact the affordability and quality of their phone, Internet, and video services,” Franken wrote in a letter to AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes. (Time Warner, the programmer, is completely separate from the similarly named cable company purchased by Charter last year.)
The AT&T/Time Warner merger would still undergo an antitrust review at the Department of Justice. But that process doesn’t include the same public participation as an FCC review and doesn’t force the merging companies to prove that the deal is in the public interest.
“While we appreciate your testifying before the Senate Judiciary Committee in December of last year, we remain concerned about how a deal of this size could affect consumers and competition,” Franken and other senators wrote. “AT&T is already the world’s largest pay-TV provider and the largest telecommunications company. Combining it with one of the world’s largest producers of content gives AT&T-Time Warner both the incentive and ability to use its platform to harm competitors, and as a result, consumers. The combined company could promote its own programming above that of other content companies’ or restrict other distributors’ ability to offer its highly desired content. As a result, the merger could raise prices on consumers, reduce access to independent programming; and harm small businesses, content distributors, and innovative new business models.”
FCC merger reviews often impose requirements on the merging companies to offset any public interest harms caused by the combination. So far, AT&T and Time Warner have not shown that “innovative customer offerings” made possible by the merger would lessen or outweigh “the substantial competitive and consumer harms that were raised by many members of the [Senate] panel,” the senators wrote.
The senators asked AT&T to provide a public interest statement by February 17 that explains how the merger would benefit consumers, encourage competition, remedy potential harms, and serve the public interest. In particular, the senators said the statement “should demonstrate how the deal would further the broader policy goals of the Communications Act, including deploying services, particularly to rural and underserved areas, ensuring non-discriminatory access to communications networks, improving network reliability, promoting diversity of ideas and voices in the marketplace, and encouraging the free flow of information via telecommunications services.”
The senators concluded their letter by saying telecom and media mergers should only be allowed if they result in “better and more affordable services for consumers across the nation.”
When contacted bytoday, an AT&T spokesperson said it “will follow all processes required by law.” The company did not say whether it will file the public interest statement requested by senators. While providing a public interest statement to senators might help build public support for the merger, the company isn’t required to do so.
“We are always happy to answer any questions about the merger and, of course, will follow all processes required by law, including the extensive Hart-Scott-Rodino review process at the Department of Justice through which we will produce millions of documents and extensive analyses,” AT&T said. “As we testified recently before Congress, the merger will create more competition for cable TV providers, giving consumers more options and accelerating next generation wireless broadband.”