Federal Regulators Threaten Comcast and AT&T Acquisitions

Comcast (NASDAQ:CMCSA) acquired a 51% stake in NBCUniversal from General Electric (NYSE:GE) back in January, but now a federal judge is re-assessing the sale, and could undo the agreement or force changes.

Merger settlements are usually reviewed by a federal court judge to make sure they don’t violate antitrust laws, and Judge Richard Leon, of the District of Columbia federal court, is criticizing the arbitration terms for online content distributors, saying he may not sign off on the agreement.

Judge Leon says that he is concerned that the arbitration is not in the public interest, as it could threaten content licensing agreements of NBC programming to other cable and satellite companies, as well as online content providers, that compete with Comcast’s cable services. Should the agreement be granted court approval, Leon says that it might require an annual status hearing to ensure that Comcast is continuing to operate in the best interests of the public.

The terms of Comcast’s (NASDAQ:CMCSA) seven-year agreement say the company must license programming to online distributors competing with its cable service. Any company that thinks Comcast-NBCUniversal has violated the terms of the agreement can file a complaint with the Justice Department, which will enter into an arbitration process that cannot be appealed. However, the companies would have the option of entering into arbitration with the FCC, which can be appealed.

AT&T/T-Mobile

The AT&T (NYSE:T) acquisition of T-Mobile from Deutsche Telekom AG (PINK:DTEGY), under scrutiny by federal antitrust regulators for limiting competition in the wireless communications market, is finding some support in a Louisiana regulator and 11 state attorneys general.

The Louisiana Public Services Commission voted 4-1 to approve the merger, finding no reason to believe it would have negative implications for the public. And eleven attorneys general have written to the U.S. Justice Department and the Federal Communications Commission to express their belief that the merger would actually benefit the public by bringing better service and coverage and faster data speeds to consumers.

The attorneys general from Arkansas, Utah, Alabama, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, West Virginia and Wyoming asked for a conditional approval of the merger, with terms protecting competition and the public interest. The AGs recognized that the deal could threaten competition in select markets, and so asked that there be targeted remedies prepared for such an event.

While the attorneys general are allowed to express their opinions, it is the Justice Department and the FCC that will ultimately decide whether to approve the merger. If the acquisition goes through, Verizon (NYSE:VZ) and the new AT&T (NYSE:T) would have an 80% share of the wireless market. While AT&T says the deal would help the company expand faster service to more customers, the merger’s critics contend that, in decreasing competition, prices would go up and customer choice would be limited.