A combination of political transition, economic forces, and good timing may spark a flurry of mergers and acquisitions in the telecommunications and media industries this year.
Deregulation and market determinism are major parts of the new administration’s agenda. And the new Republican FCC chairman, Ajit Pai, isn’t likely to push against the tide when it comes to industry consolidation. Pai recently said on CNBC’s Mad Money that he’ll use a “light touch” approach to regulating the industry, and not “micromanage” the marketplace.
Pai, an ex-Verizon lawyer, was appointed chairman by Donald Trump, and Trump recently nominated him for another five-year term at the FCC. Pai was an outspoken critic of many of the agency’s actions under the leadership of ex-chairman Tom Wheeler, who was appointed by Barack Obama.
The FCC is currently engaged in a wireless spectrum auction, and will be for the next few weeks. During that time, no company that’s bidding on spectrum can hold formal discussions with potential merger partners. But after the auction is over and the prohibition lifted, M&A talks are likely to begin in earnest, industry experts tell Fast Company. And some of them will likely result in deals.
Media consolidation has been a thorny issue for Trump. On the one hand his administration has plenty of distrust and even contempt for the news media (with senior adviser Steve Bannon recently declaring that the media “is the opposition party”). On the other hand, deregulating markets (and, presumably, mergers) is a key part of Trumpism.
The biggest deal on the table right now, the proposed AT&T/Time Warner merger, provides a case in point. Trump spoke out against the merger during the campaign (Time Warner owns Trump’s arch-enemy CNN), but he has since hewed to the party line and now says he’s neutral on the matter.
FCC chairman Pai angered Senate Democrats when he decided last month not to order a full FCC review of the proposed merger, leaving only the Federal Trade Commission to examine the deal for potential antitrust violations. The political winds seem to be blowing toward an approval later this year.
Fast Company |
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