How the AT&T-Time Warner deal could escape deeper regulatory scrutiny

AT&T's $85.4 billion purchase of one of America's top media conglomerates could radically reshape the digital economy, making the deal's next step — regulatory review — hugely important to the way consumers access their media. But missing from the process could be the Federal Communications Commission, a key player in the battery of megadeals to hit the market recently.

The Justice Department is likely to analyze whether the transaction could hurt competition, and it could impose requirements on AT&T that might restrain anticompetitive practices stemming from the deal. The FCC, as the nation's top telecom, cable and broadband regulator, could seek to impose different — but no less important — conditions. But the FCC's involvement hinges on whether Time Warner sells certain assets to AT&T.

If the FCC is excluded from the process, it could weaken regulators' ability to prevent harm to competition, said Gene Kimmelman, a former Justice Department antitrust official who is now president of the consumer advocacy group Public Knowledge. “The kinds of things I can think of that would potentially prevent anticompetitive behavior may include detailed regulatory oversight that DOJ is not inclined to engage in — and doesn't think it has the capacity to engage in,” he said. “They may be tools that are not available without the FCC being involved.”

The FCC generally has a say in acquisitions that involve the sale of assets regulated by the agency. This may include, for example, TV stations owned by one of the two companies. But in the deal involving AT&T and Time Warner, no such assets may change hands. Time Warner owns just one Atlanta-based TV station, and it has not announced whether the station will be sold to AT&T. The station could be spun off and excluded from the deal — which would also eliminate any reason for the FCC to become involved, said Rich Greenfield, an analyst at BTIG