Former FCC chairman Julius Genachowski, now managing director of asset management firm, Carlyle Group, suggested Friday that the Department of Justice has an uphill battle in its effort to block the AT&T-Time Warner merger.
The suit is currently being litigated in a D.C. federal circuit court after Justice concluded the merger would be anticompetitive unless Turner network content was spun off because the combined company would have the ability and incentive to withhold programming from competitors.
DOJ filed suit last November to block the merger, to the surprise of many who saw the primarily vertical merger as a likely candidate for approval with conditions, though the arrival of a quixotic President clouded that horizon given his threat as a candidate to block the deal.
Genachowski has said he didn't think DOJ would win, but he was expounding on why in a KindredCast podcast interview Friday (April 13) conducted by Ed Vaizey, former UK Telecoms Minister under Prime Minister David Cameron.
Genachowski, whose FCC blocked the AT&T-T-Mobile merger but approved Comcast/NBCU, was asked his take on AT&T-Time Warner, which Vaizey said appeared to be more like the Comcast deal.
"On the content side, it's hard to argue that it's not a very competitive landscape," Genachowski said. "On the distribution side, he said "DirecTV only plays in the pay TV space, not in the broadband space. "If you're looking at the pay TV market, you have another satellite provider plus two or three cable providers. So, I think, tricky to argue that there's insufficient competition there."
"So," asked Vaizey, "it's clear that if you were at the FCC, you'd clear the AT&T deal."
Genachowski would not go that far, saying he never pre-judges. But he did say: "[I]it does feel like a hard case to prove."
The former chairman suggested Justice needed to be taking into account the amount of competition from large online companies in content and distribution.
"[W]e know from a business perspective that the role [Google, Apple, Facebook, Amazon, Netflix] are playing in the landscape are part of what's driving companies in content distribution to look to build up scale, to compete with them," he said, the point AT&T and other media companies have made for their mergers. "So, you'd think that would be part of the analysis too...I think government has made mistakes, certainly in the U.S., on sticking to the old paradigm for too long."