Rash Report: Media mega-merger plan raises political eyebrows

AT&T's proposed purchase of Time Warner is designed to respond to a rapidly evolving media environment. But even quicker shifts in the political landscape could make the merger moot.

Whatever justifications the Department of Justice or other federal regulatory agencies tasked with the approval process are presented, the $85 billion media megamerger comes amid increasing concern over the concentration of institutional power, be it political, media or business.

In fact, all three entities crowd the bottom of Gallup's 2016 ranking of Americans' confidence in 14 key institutions. "Big business" is second-to-last, with only 18 percent expressing "a great deal" or "quite a lot" of confidence in the sector, just below TV news, 21 percent, and newspapers, 20 percent. Congress ranked last with only 9 percent.

While polls indicate the establishment candidate will win the presidency, Hillary Clinton is well aware that 2016 is an insurgent, not an insider, year. So while she had a more measured merger reaction than the quick condemnations from Donald Trump and Bernie Sanders, the transaction may face even tougher scrutiny than previous deals such as Comcast-NBCUniversal.

Minnesota Sens. Amy Klobuchar and Al Franken, both Democrats, will play key congressional roles. But concern about the accord seems bipartisan, as evidenced by a statement from Sen. Mike Lee, R-Utah, and Klobuchar, the chairman and ranking member, respectively, of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights. "We will continue to carefully review and investigate any consolidation in this industry to make sure that it does not harm consumers," they wrote.

"I have significant concerns about this merger based on the fact that we have already seen substantial consolidation in this industry," Klobuchar elaborated in an interview. "This dwarfs some recent mergers, including Comcast-NBC, AT&T-DirecTV, and Charter-Time Warner [Cable]," Klobuchar said, adding: "You are seeing this substantial consolidation; this is a humongous amount of money."

Humongous is the word many may use to describe their monthly cable or satellite-TV bills, which makes this merger more tangible to voters than other recent corporate combinations.

"There are reasons why we have special regulations of media," said Paul Vaaler, who holds the John and Bruce Mooty Chair in Law and Business at the University of Minnesota Law School. "There has always been a greater degree of popular interest because of the way that media cannot only reflect but form opinions."

Franken, who is also on the Antitrust, Competition Policy, and Consumer Rights subcommittee, contends that many conservatives are concerned, too.

"What people on both the left and the right worry about is a few large corporate entities pretty much controlling what information people see and the format they see it, and these sort of mainstream establishment corporate interests are an anathema to people like Bernie [Sanders] and much more conservative groups," Franken said.

The changing nature of conservatism, at least in 2016, may imperil approval, too.

"There is no friend of this merger on the presidential dais, and that is distinguishable in this cycle compared to other cycles," Vaaler said. "What would Mitt Romney say? 'Let's ask the individuals why this makes sense from a strategy standpoint, and if it does we're confident competitive forces will step in.' "

"The constituency he's courting is the constituency who are subscribers of this content," Vaaler said.

The election may have triggered the timing, Vaaler added, since the waning days of the Obama administration may make it a better, albeit not ideal, time to begin the approval process. And from a business perspective "these tend to come in waves in part because of the regulatory and political cycle."

Key executives are well aware of this wave, and how the regulatory and political cycle works. In joint appearances, the CEOs of AT&T and Time Warner have tried to blunt concerns on concentration regarding CNN's independence, content, distribution, pricing and other issues such a merger would bring. And according to the New York Times, AT&T has nearly 100 registered lobbyists.

Meanwhile, the evolving political and social environment, which continues to upend electoral assumptions as well as public and political perceptions of free-trade agreements and other issues, isn't lost on Minnesota's senators.

"You really want to look at the facts of any deal and not just be taken in by the politics of the moment. But to me this is different than some of the other issues, because this is something we have consistently questioned, this consolidation," said Klobuchar.