Here listening to Bloomberg Law. I'm June Grosso. H T and T is trying to become one of the world's biggest media companies by buying Time Warner, which owns CNN, HBO, and Warner Brothers. Billion dollar wager by A, T and T, the largest deal announced globally this year, is controversial and political. President elect Trump vowed to block the transaction, calling it poison to democracy in October. Our guest is Jennifer Ree,
senior litigation analyst for Bloomberg Intelligence. Jen this deal is huge, and there's been criticism that it puts too much power into the hands of one company. Is that something that the regulators are going to be looking at, you know, not precisely. No, And that's certainly the atmospherics and the reaction that we've seen. There's been quite a need jerk
reaction to this deal. But at the end of the day, with the interest regulators do is ask whether the combination of two companies could have the effect harmon market down the road once they're merged by raising prices, reducing innovation, reducing choice, And they do that by asking do they directly compete a horizontal deal combining you know, the products and services that they both provide um and in that way raise the prices because they're the only provider of
that product or service or are they in the same chain of distribution at different levels vertically related and could that cause harm in this deal is a deal where the two companies do not compete, they are vertically related, but it will get carefully scrutinized, I assume because it is just so big. What are some of the possible antitrust concerns, Well, it will definitely get carefully scrutinized because vertical deals, although they're not considered as problematic as horizontal deals,
can causing any trust issues. And so, for instance, a very similar deal, which is when Comcast enter the joint venture with NBC Universal, was carefully scrutinized and the antitrust regulators both from the Justice Department and the FCC determined that there could be harms that needed to be remedied. So they forced the emerged company to sign onto a
consent order to agree to all sorts of provisions. And they'll do the same thing here because the relationships are complicated when you get into this vertical relationship and there can be a foreclosure effect. I mentioned a few moments ago that Trump, during his election bid, in fact, I think it was October twenty two, just about the time the deal was announced, said he's vehemently opposed to the deal and basically said he's going to stop it. Can
the president stop the deal? He cannot. Now it's created an interesting dynamic dynamic for sure, to have a Republican president make a comment like that. Um, the president does not have the authority to stop to merging companies from closing. They only a court order can do that. So even the Justice Department and Federal Trade Commission don't have the
authority to do that. They have to ask a court to block the deal, and that would be the same for a T and T. Now where he has authority is that he will be able to appoint when he's president, new officials in charge of anti trust at the Department of Justice as well as at the FTC. This is a d o J matter, and those officials, you know, are going to be expected to carry out his agenda.
But the way it's looking is pretty good for the deal because what's been bandied about in the news is Josh Wright as the person who's helping him with transition, who might even be appointed the Assistant Attorney General in charge of anti trust here. And he is well known to be very conservative, to be business friendly, and to take a very pragmatic and economics based approach to deals. I would be enormously surprised if he was behind seeking
a court order to block this deal. To talk in very broad generalities here, describe what the Republican approach normally is to anti trust as opposed to the Democratic approach. Well, the Republican approach has traditionally been much just a lighter hand, more business friendly. So in other words, UM, thinking about the efficiencies that are created in the deal and asking if we have concerns, how can we remedy those concerns.
Enter a consent order where where you know that alleviator concerns, rather than going to court and trying to stop a deal it could have some good effects. Um. And then Democrat the Democrats, the direction it's been going in the last few years has been really interesting because more and more they seem to be going the direction of well, big is bad. We we don't like the deal and
we think it could have a bad effect. So so let's sort of work backward and you know, define markets and say they have a problem these markets that that will ultimately have a bad effect. And and you know, again Josh Wright is very pragmatic and believes that economics should be applied. And when you apply economics to a
vertical deal usually you see that it's pro competitive. What deals are pending right now that are being considered by the Justice Department and may have will there be a change if if someone else comes in in the way they're being viewed, Well, there there could be. It depends on timing because it will take some time to get the new officials in. But you have pending right now, of course Alaska Air and Virgin America UM, that's still as I understand, I believe you know, working on negotiating
remedies for their deal. You have two deals that are in court right now, an attempting to acquire Humanita and Anthem attempting to acquire Signal. Now that's an interesting situation because it's in front of judges, so not necessarily affected by this change in the d o J. But you may have We know that ETNA has been trying to settle and if you have somebody knew who steps in
and this isn't resolved yet in court. There may be a willingness by the d o J to to come in and try to settle that matter rather than going through with the court hearing. Going back to this merger between Time Warner and A T and T, it's unclear, it seems whether the deal will be subject to f
c C review. Tell us a little bit about that. Well, on the f c C side, they the FCC would only have the authority if if FCC controlled licenses are transferred, and that's what gives them authority, And it's just unclear. You know, they do have some FCC licenses, but it's unclear whether they're trying to get rid of those licenses so that they don't they aren't in front of the FCC, which has a broader standard than the Justice Department does in terms of trying to stop or oppose a deal.
You've been on many times because we love to have you, because it's it's like having a professor tell us in simple terms about anti trust. So let's just sort of sum up in a way what's been happening with antitrust under President Obama. Well, certainly it's become much more aggressive. And the interesting thing is that we overall you're more
aggressive and a lot more enforcement. But if you dig in and you look at the statistics in terms of the deals that get filed before the agency and then get investigated, you know, they collect documents, they take depositions. That percentage hasn't really changed over the last ten or fifteen years. It's it's between you three point five three and about four and a half percent. Kind of goes
back and forth. What we've seen though, the differences a greater willingness in the last few years to actually litigate, to actually go to trial. You know, back when I was practicing, sometimes the attorneys would in a way you want to play chicken with the regulators, because they'd offer, we'll sell these assets and that should resolve your concerns. And the regulator would say, well, hey, that's not quite good enough, and the lawyers would say, you know, that's
what we're offering. We think this fixes the concerns. If you don't like it to us, take us to court, and the regulators would back off. And that's the way once upon a time it was. Doesn't happen anymore. Now They don't back off. And how long will a deal like this take to go through all the various hurdle might might to a T and T and time order have to give up a few things. Well, I do
think they'll absolutely have to sign a consent order. I don't believe they'll actually have to divest anything, but I do think they'll have to sign on to what we call behavioral conditions, where they promise not to discriminate, let's say, against other distributors of programming content, or they promise not to discriminate against competitor content content companies such as NBC
U and Comcast UM. I think it will take a long time, and I actually think it's probably, you know, in their benefit to drag it a little bit here and wait until the new administration officials are in there and they're the ones that dig into this deal. I I do, these things, you know, take a long time.