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AT&T, Time Warner, & The FCC Question

When AT&T dropped $85 billion on entertainment giant Time Warner Cable, numerous questions arose. What would happen to the two behemoths as they combined their forces? How would customers and employees be impacted by the move? But perhaps the only questions that matter are whether or not the FCC will investigate this massive acquisition, and what that could mean for the future of both companies.

The FCC has a heavy task when it comes to major mergers like this: determining whether or not the business move serves the public interest. If the government agency decides that AT&T’s buyout doesn’t fit the bill, there could be a number of major problems for the company.

There have already been rumblings in this regard: numerous public interest groups have blasted the deal, claiming it combines too much media power under one umbrella. Politicians from both sides of the aisle have called for the FCC and Justice Department to launch thorough investigations on the legality and ethical advisability of this newfound media giant. So what’s stopping the FCC from diving in?

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It all comes down to technicalities. The FCC can only really justify investigating the merger on the basis of broadcast licenses. If the companies transfer ownership of the licenses, they are liable for review. However, the only current broadcast license of note is WPCH-TV in Atlanta, a major network that is one of the cornerstones of Time Warner’s empire. Additionally, CNN and HBO have separate licenses that allow them to distribute to pay-TV stations — which also fall under the oversight jurisdiction of the FCC.

There are of course ways around this that would allow AT&T to avoid any interference from the FCC, but most are convoluted and rife with additional issues. The company would risk having to divest itself of some of the property it had just acquired. But ultimately it all comes down to numbers: if AT&T has more to gain than lose by abandoning the properties that require license transfers, it will jettison them regardless of the fallout.

The FCC has declined to comment on the possibility of an investigation. As of this writing it has not received any requests for license transfers from AT&T or Time Warner.

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