TW Earth Station Licenses Could Give FCC Further Entree to Review Its Takeover by AT&T

Others were split in interviews this week on whether, if TW sells WPCH-TV Atlanta as some expect (see 1610240046), the commission would have any oversight. Also Wednesday, word emerged that the Senate Antitrust Subcommittee may hold a hearing Dec. 7 on the deal, with both companies' CEOs testifying (see 1610260031).

"All of Washington communications circles are scratching their heads about" whether the FCC will seek an oversight role, "but we don't know the answer," said former FCC Chairman Reed Hundt. Any broadcast license transferral would necessitate FCC review of the deal, and thus TW would have to dispose of the license, leave it behind or sell it to avoid review, Hundt said. The FCC and TW didn't comment.

Washington Analysis TeleMedia/Internet analyst Tom Seitz wrote in a note Wednesday that TW employs earth stations using broadcast auxiliary service spectrum for live CNN feeds. "Assuming AT&T wants to keep the CNN spectrum, these assets could trigger a formal FCC review," he said. Commission reviews of Comcast buying NBCUniversal and of Comcast's failed purchase of Time Warner Cable show the agency is far more aggressive in regulating cable and broadband than DOJ would be, so AT&T will want to structure the deal so FCC review isn't required, said Boston College associate law professor Daniel Lyons.

AT&T in a statement said it and TW "are currently determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction. To the extent that one or more licenses are to be transferred, those transfers are subject to FCC review. We take a very simple approach here: we follow the law and so whatever the law requires that's always what we'll do."

CNN holds multiple earth station licenses for transportable Ku-band video uplinks to be used in establishing communications to home offices from remote locations, International Bureau filings indicate. Those licenses are in Los Angeles, Atlanta and New York City.

If precluded from being part of the review itself, the FCC potentially could try to influence the outcome through rulemakings on issues like program access or program carriage, one cable lawyer said. For example, the lawyer said, the FCC could use the Further NPRM issued in 2012 on regional sports networks as such a tool, given the sports programming holdings of TW. Some said the FCC might be able to consult with DOJ antitrust authorities on the transaction review if the deal involves companies in its jurisdiction, even if the combination itself isn't subject to FCC approval. Hundt disagreed: "DOJ doesn't get to invite other people to participate." Conversely, he said, in a joint review, there are procedures for the agencies to consort, such as looking at documents together or collaborating "in a lot of practical ways."

With no licenses changing hands, the FCC "would have to be content with having its alums doing the review," Hundt said. DOJ Antitrust Division head Renata Hesse previously was special counsel on transactions for FCC Chairman Julius Genachowski and oversaw AT&T's failed bid for T-Mobile, and the division's deputy assistant attorney general-litigation, Jonathan Sallet, was until earlier this year FCC general counsel (see 1607190061).

It's tough to envision the commission having no oversight in the deal, said Parents Television Council President Tim Winter. Given the large amount of inherent regulatory authority the FCC has for video distribution issues, he said, "They should have a voice." Echoed Adonis Hoffman, chairman of Business in the Public Interest, "I think it will be difficult to evade FCC review, even if there are no licenses to be transferred, due to the 'public interest' standard and the implications for consumers." Hoffman's firm doesn't represent the combining companies.

FCC participation in reviewing AT&T/TW "will likely have a significant impact on the outcome" since its public interest standard is broader than DOJ's antitrust standard, Seitz wrote. "It's hard to imagine this activist Commission will not at least attempt to play a substantial role." Minus those broadcast assets changing hands, Seitz said, the agency might have to look for "a novel hook for review authority" -- something not out of the question given past FCC practices "find[ing] legal authority out of thin air for many of its actions." For example, he cited September's vote on the independent programming NPRM (see 1609290036).

AT&T/TW already has gotten pushback from critics. The proposed deal is emblematic of a profound market problem -- "a tight oligopoly on steroids ... that rejecting or conditioning mergers cannot address," Consumer Federation of America said in an issue brief Wednesday. It called communications market dominance of AT&T, Charter Communications, Comcast and Verizon "a deeply troubling public policy problem," acknowledging that any breakup, while desirable, "is a daunting undertaking." As an alternative, it called for regulation of set-top boxes, zero rating, privacy and business data service contract conditions as a means of lessening concentrated market power. Free Press, meanwhile, launched an online petition urging a denial of regulatory approval. Buying TW "would allow AT&T to control mobile and wired internet access, the largest satellite-TV provider, cable channels, movie franchises, a film studio and more," Free Press said. "That means AT&T would control internet access for hundreds of millions of people and the content they view, enabling it to prioritize its own offerings and use sneaky tricks to undermine Net Neutrality." AT&T didn't comment on that.