AT&T's enormous, $85.4 billion purchase of one of America's top media conglomerates could radically reshape the digital economy, making the deal's next step - regulatory review - hugely important to the way consumers access their media. But missing from the process could be the Federal Communications Commission, a key player in the battery of mega-deals recently to hit the market.
The Justice Department is likely to analyze whether the transaction could hurt competition, and could impose requirements on AT&T that might restrain anticompetitive practices stemming from the deal. The FCC, as the nation's top telecom, cable and broadband regulator, could seek to impose different - but no less important - conditions. But the FCC's involvement hinges on whether Time Warner sells certain assets to AT&T.
If it is excluded from the process, it could weaken regulators' ability to prevent harms to competition, said Gene Kimmelman, a former Justice Department antitrust official who is now president of the consumer advocacy group Public Knowledge.
"The kinds of things I can think of that would potentially prevent anticompetitive behavior may include detailed regulatory oversight that DOJ is not inclined to engage in - and doesn't think it has the capacity to engage in," he said. "They may be tools that are not available without the FCC being involved."
The FCC declined to comment.
The FCC generally has a say in acquisitions that involve the sale of assets regulated by the agency. This may include, for example, TV stations owned by one of the two companies. But in Saturday's deal involving AT&T and Time Warner, no such assets may change hands. Time Warner owns just one Atlanta-based TV station, and it has not announced whether it will be sold to AT&T. The station could be spun off and excluded from the deal - which would also eliminate any reason for the FCC to become involved, said Rich Greenfield, an analyst at BTIG, in a research note Saturday.
The FCC played a central role in overseeing the last mega-deal resembling the AT&T-Time Warner tie-up. Back in 2011, the FCC gave Comcast a green light to acquire NBCUniversal - but only under certain conditions aimed at preventing the combined company from abusing its newfound market power. The Justice Department approved the deal with its own set of conditions.
Any conditions imposed by the Justice Department on the AT&T-Time Warner deal are likely to be structural in nature - perhaps requiring the two companies to sell off some assets, for instance. Antitrust regulators would be more wary of imposing behavioral remedies that seek to shape the business practices of the combined company, said Andrew Schwartzman, a public interest law expert at the Georgetown University Law Center.
"The DOJ enforces the antitrust laws, which are focused on economic harm to competition," he said. "The FCC looks to the same concerns, but it operates under the Communications Act's public interest standard. That gives it a much broader purview to look to potential future problems."
Examples of behavioral conditions the FCC might seek include, for example, a ban on AT&T offering Time Warner's content to AT&T's wireless subscribers on an exclusive basis. Or the agency may try to prevent AT&T from exempting Time Warner shows and movies from cellular data caps, a practice known as zero-rating that consumer advocacy groups have targeted as being potentially unfair to other companies.
"Zero-rating any of AT&T's content over wireless or broadband would be prohibited" by the FCC, predicted Craig Moffett, a telecom analyst at MoffettNathanson.
But if the FCC were not involved in reviewing the transaction, many of these behavioral fixes could be left on the cutting-room floor.
AT&T's chief executive, Randall Stephenson, said Saturday that the Time Warner acquisition is a straightforward case of so-called "vertical" integration that does not involve the elimination of a direct rival.
"There is no competitive harm that is rendered by putting these two companies together," he told reporters.
But a growing concern among regulators is the ability for increasingly diversified mega-companies to discriminate against firms in related or adjacent industries. Last year, the government cited precisely that reason for blocking Comcast's failed acquisition of Time Warner Cable (which is a completely separate company from Time Warner). The FCC and the Justice Department feared Comcast could use its dominant position in the cable broadband industry to force online video companies to play by its rules.
Without behavioral fixes from the FCC, AT&T could move forward with aggressive cross-promotion of its new content on all its distribution platforms, opponents of the deal say.
Another aspect on the regulatory front that makes this issue difficult is the looming presidential election, which will affect who at the Justice Department may end up overseeing the deal. GOP nominee Donald Trump has already said he would seek to block the acquisition; a spokesperson for Democratic nominee Hillary Clinton did not immediately respond to a request for comment.
Although the FCC's absence from review could lead to more relaxed conditions on the deal, said Kimmelman, the Justice Department could also conclude that there is no way for it to apply enough remedies to make the deal work by itself - potentially leading the agency to block the deal.