Buying of HBO, CNN parent company for $85bn sparks calls for scrutiny

dimeji akinloye

October 24, 2016 1:59 AM

It is believed that regulators will closely scrutinize the effort to create a new telecommunications and media giant.

Time Warner

AT&T Incs proposed $85 billion takeover of

The biggest deal of the year, announced just over two weeks before the Nov. 8 U.S. election, is a gamble on a victory for Democratic presidential candidate Hillary Clinton and a continuation of the status quo on anti-trust and regulatory enforcement.

The Republican candidate Donald Trump, who is trailing Clinton in the polls, has said he would block the takeover.

The billionaire businessman has railed against the media's role in what he has described as a "rigged" election and he believes the acquisition of Time Warner, which owns CNN and Warner Bros, Hollywood's largest film and television studio, would concentrate too much power in one organization.

"AT&T, the original and abusive 'Ma Bell' telephone monopoly, is now trying to buy Time Warner and thus the wildly anti-Trump CNN. Donald Trump would never approve such a deal because it concentrates too much power in the hands of the too and powerful few," Trump economic advisor Peter Navarro said in a statement on Sunday.

Clinton, who has expressed misgivings about other corporate megamergers, has not yet commented on the takeover.

But Senator Bernie Sanders, Clinton's former rival for the Democratic party's nomination, said on Twitter that the administration should "kill" the Time Warner takeover because it would mean higher prices and fewer choices for consumers.

Sanders' comments carry weight because Clinton needs Sanders' coalition of young and left-leaning voters to propel her to the presidency.

Clinton spokesman Brian Fallon told reporters on Sunday there were "a number of questions and concerns" about the deal "but there's still a lot of information that needs to come out before any conclusions should be reached."

The Senate subcommittee on antitrust will hold a hearing on the acquisition sometime in November, said subcommittee chair Senator Mike Lee, a Republican, and the ranking Democrat, Senator Amy Klobuchar.

Tim Kaine, Clinton's running mate and a senator from Virginia, said lawmakers and regulators would have to review the deal and "get to the bottom" of questions over whether the merger would decrease competition.

"Less concentration, I think, is generally helpful especially in the media," Kaine said on NBC's "Meet the Press."

The U.S. Justice Department, not the president, has the power to reject such a deal if it violates antitrust laws. AT&T said it is unclear if the Federal Communications Commission will also have jurisdiction to review the deal.

A spokesman for the Justice Department declined to comment.

AT&T has described the deal as a "vertical merger" because there is no overlap between the two companies and hopes that such a tie-up will get the regulatory green light by the end of 2017.

"In the modern history of the media and the Internet, the U.S. government has always approved vertical mergers like ours, because they benefit consumers, strengthen competition, and, in our case, encourage innovation and investment," David McAtee, AT&T senior executive vice president and general counsel, said in a statement on Sunday.

The Time Warner takeover mirrors the 2013 $30 billion purchase of NBCUniversal by its rival Comcast, a deal which was cleared after regulators imposed concessions on the cable operator.

dimeji akinloye