AT&T Set to Lobby for Merger With Deep Pockets and a Big Network

AT&T Set to Lobby for Merger With Deep Pockets and a Big Network

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Issues that led to the collapse of those deals seem even more prevalent now, as the nation closes out a presidential campaign that has featured candidates from both parties — most notably Donald J. Trump and Bernie Sanders — promising to challenge corporate power.

“The public is really stirred up and angry about the growing dominance of a small number of firms,” said Gene Kimmelman, president of Public Knowledge and a former antitrust official at the United States Justice Department during AT&T’s bid for T-Mobile.

The alarms over AT&T’s deal for Time Warner stem from mounting frustration over high prices and the lack of competition in the telecom industry, with most Americans limited to one or two providers of broadband services. Regulators are set to focus on AT&T’s powerful control over broadband and television customers since it is the nation’s second-largest wireless firm and biggest paid television provider after its recent acquisition of DirecTV.

With Time Warner’s marquee content from its HBO and CNN channels and movies from Warner Bros., regulators will also scrutinize whether the creation of a multi-tentacled juggernaut could suppress competition in the tech, media and telecom industries. One way the combined company might do that is by offering unlimited streaming of HBO’s “Silicon Valley” or “Game of Thrones” to its wireless customers or making it harder for competing streaming video services and television programs to reach AT&T subscribers.

Lawmakers have already vowed a tough review of the deal, regardless of the lobbying full-court press they know will be playing on Capitol Hill.

“We are seeing increasing consolidation, especially scary consolidation, between the content side of the media and the internet provider side,” said Senator Amy Klobuchar, Democrat of Minnesota, the ranking member on the Senate Judiciary Committee’s antitrust panel.

The panel could hold a hearing on the proposal — with sworn testimony from AT&T executives — as soon as next month. “We have a duty to examine this deal,” Ms. Klobuchar said.

James W. Cicconi recently retired as the head of AT&T’s lobbying team.

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Brendan Mcdermid/Reuters

AT&T’s lobbying playbook from the T-Mobile bid offers the most detailed blueprint of what might unfold again. In that campaign, AT&T helped line up dozens of elected officials from communities across the United States, many who had received financial support, to send letters or sign petitions urging the deal’s approval.

A similar wave of endorsements came from community and nonprofit groups, many of which AT&T also helped fund through its corporate foundation, including the National Association for the Advancement of Colored People.

More than 100 lawmakers on Capitol Hill — again, many of whom had taken contributions from AT&T — also signed letters urging the Justice Department to sign off on the transaction. The company funded a $40 million advertising campaign in cities nationwide to try to build public support for the deal.

Arik Ben-Zvi, a lobbyist at Glover Park Group, which was hired by rivals to Comcast to help challenge its deal with Time Warner Cable in 2015, said he thought it would be a mistake to rely on the same tactics this time. “This massive campaign of blanketing the Hill, that is the wrong way to go,” he said.

Instead, Mr. Ben-Zvi said, AT&T needs to be more specific and authentic to be more effective. The company must confront head-on any questions about the impact its deal would have on its competitors, for example, and make sure that regulators and lawmakers understand that, with so much changing so fast in the tech sector, it has no choice but to pursue a deal like this.

“Incumbent telecommunications companies like AT&T are deeply threatened by the emergence of Silicon Valley giants that are poised to take over this space,” said Mr. Ben-Zvi, who is not working on the AT&T-Time Warner deal. “Companies like Amazon, Google, Netflix — those are now some of AT&T’s rivals, not just companies like Verizon.”

AT&T would not discuss details of its lobbying strategy, including whether it would employ tactics similar to those in previous mergers. “We are early in the process,” Mr. McAtee, the AT&T general counsel, said.

Robert Quinn Jr. will help lead AT&T’s lobbying efforts for the merger.

Credit
Stephanie Green/Bloomberg

Mr. McAtee will help lead AT&T’s merger efforts in Washington, along with a colleague, Robert W. Quinn Jr., a policy insider in charge of lobbying who has been at the company for three decades.

Both are new to being in charge. AT&T’s storied lobbying operations were long led by Mr. Cicconi, who retired last month. Mr. Cicconi in the past worked closely with Wayne Watts, who served for decades as AT&T’s general counsel and retired last year.

Together, Mr. Cicconi and Mr. Watts shepherded more than a half-dozen blockbuster mergers in the last two decades, from SBC’s $75 billion merger with Ameritech in 1999 to AT&T’s acquisition of DirecTV last year.

While AT&T will not discuss its lobbying strategy, the company is already offering clues about how it will position the deal. Unlike a “horizontal” merger that unites competing companies in the same line of business, this transaction would not reduce the number of options for consumers, AT&T executives argued in a note to investors sent last weekend.

The company also said it would not withhold Time Warner shows as exclusive content just for AT&T subscribers. It plans to create an advertising-based video business for mobile devices, similar to the ad business of the web juggernauts Google and Facebook.

The biggest advantage AT&T may have is the likelihood the deal won’t be scrutinized by the Federal Communications Commission, the regulatory agency that typically gets involved if there are transfers of telecom or broadcast licenses. If Time Warner divests the one Atlanta broadcast station it owns, that would make the F.C.C.’s jurisdiction moot, leaving the scrutiny to the Justice Department. The merger would be reviewed under a new administration, potentially with new antitrust officials picked by the next president.

Even so, it will not be easy. Michael J. Copps, a Democrat and former commissioner for the F.C.C., said that he was preparing, with consumer groups, to battle an AT&T lobbying surge.

AT&T “has a huge lobbying budget and the sharpest lawyers money can buy to get this deal approved,” Mr. Copps said.

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