Political pressure stirred up by the FCC net...
Political pressure stirred up by the FCC net neutrality proceeding could lead to “negative spillover” for Comcast’s planned buy of Time Warner Cable, said Guggenheim Partners analyst Paul Gallant in an email to investors Friday. That could lead to harsher…
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deal conditions or an FCC challenge to the transaction, Gallant said. “We don’t believe that is the most likely outcome, but it is more likely today than it was five weeks ago when the FCC issued its net neutrality proposal.” Regulatory approval of AT&T/DirecTV is likely, “but not highly likely,” Gallant said. AT&T’s deal concessions seem “well-designed” to address concerns about pay-TV pricing and expand broadband availability, Gallant said. If Sprint and T-Mobile were to agree to combine and seek regulatory approval, it would likely be the first telecom deal to take the Department of Justice to court for not approving it, Gallant said. “Sprint/T-Mobile would actually have a decent chance of beating DOJ.” Such a win could then cause the FCC to approve the deal, he said. “It’s definitely still an uphill battle, but not the hopeless case some believe.” On peering, Gallant said it’s unlikely that the FCC would ban paid peering fees by Netflix and content delivery networks. Most investors don’t see Title II reclassification of broadband as likely to happen, Gallant said. But unlike the last net neutrality rulemaking process, the U.S. Court of Appeals for the D.C. Circuit’s Verizon decision narrows the other options available to the FCC, Gallant said. “We are thinking the movie ends well for ISPs this time as well, but right now we're not as confident as most investors we spoke with.” On the upcoming Aereo decision, Gallant said only a “complete victory” for broadcasting would be viewed as a positive for broadcasters. Other outcomes, such as a remand back to lower courts, are “likely to be read as at least mildly negative for broadcasters,” he said.