AT&T-Time Warner deal doomed? - Politico

AT&T-TIME WARNER DEAL DOOMED? — Via a D.C. lobbyist: "If history is any guide, millions of dollars will be spent on lobbying the WH, Congress & key committees to nudge the merger towards approval. But anyone paying close attention to recent mega-telecom match-ups will realize that the FCC has managed a very tight inter-agency process that has kept outside political influences at bay.

"Sometimes in the past the announcement of a potential merger began what was essentially a negotiation with the FCC on pricing, public access, etc. That system no longer rules…… If the application itself is wanting, marketplace actions taken in contemplation of FCC approval will have zero impact on the government's deliberations. FCC commissioners and staff are no longer messing around."

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CAVEAT … It's not certain the FCC will even get the chance to shut the deal down (more on this below).

TRUMP TEAM SAYS NO WAY — WSJ's Bob Davis: "AT&T Inc.'s blockbuster weekend bid^[1] to purchase Time Warner Inc. quickly turned into a election-year issue, with Donald Trump's campaign vowing to block^[2] the deal as part of an effort to use antitrust law to make it harder for big corporations to deepen their control over inform ation.

"'We need a new way of looking at mergers that go beyond traditional model of oligopoly effect on price, quantity and economic efficiency,' University of California at Irvine economist Peter Navarro, a senior advisor to the Republican presidential candidate, said in an interview. Mr. Navarro said regulators also need to look at the 'effects of oligopoly on freedom of thought and influencing narratives that influence political process in ways that promote the agendas of the media conglomerates'" Read more^[3].

KAINE ALSO HAS QUESTIONS — POLITICO's Isaac Arnsdorf: "Democratic vice presidential nominee Tim Kaine said Sunday he's concerned about the proposed merger^[4] of AT&T and Time Warner, suggesting a Hillary Clinton administration might be skeptical of the deal if she wins the election. 'I share those concerns and questions. We've got to get to the bottom of them,' the Virginia senator told host Chuck Todd on NBC's 'Meet the Press.' 'Less concentration, I think, is generally helpful, especially in the media.'

"Clinton hasn't commented on the deal but has previously called for strong regulatory scrutiny of major mergers. … Sen. Al Franken (D-Minn.) said it 'raises some immediate flags about consolidation in the media market.' The $85.4 billion merger would increase consolidation in the telecom industry by combining AT&T's phone and internet services with Time Warner's media brands such HBO, CNN and Warner Bros." Read more^[5].

SANDERS: HELL NO! — Bernie Sanders on Twitter: "The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people"

WHAT'S AT STAKE FOR WALL STREET — Bloomberg: "Wall Street banks are writing some of their biggest checks ever to fund AT&T Inc.'s takeover^[6] of Time Warner Inc. as they seek a bonanza of fees. But there's a dose of concern that the $40 billion loan pledge may get caught up in a regulatory impasse. JPMorgan Chase & Co. has pledged $25 billion of the financing, with Bank of America Corp. providing the rest … That's believed to be the most JPMorgan has ever promised for a deal …

"The lending commitment gives the banks an advantage on bond offerings that would find willing buyers among yield-starved investors … At the same time the banks face the risk that the deal, along with a chunk of their balance sheets, would be tied up if regulators delay approving it." Read more^[7].

GOLDMAN ON 2017 — Via Goldman's "Weekly Kickstart" report: "Regardless of victor, we expect that the most likely economic policy outcomes of the US presidential election are increased fiscal spending and tax reform. … Our economists expect that Clinton's tax plans will closely resemble those put forward by the Obama Administration in the FY 2017 budget, which proposed a one-time tax of 14 percent on previously untaxed foreign profits.

"Mr. Trump has echoed the proposal by House Republican leaders, which also includes a repatriation tax holiday … Our recently rebalanced basket of 50 S&P 500 stocks with the highest earnings invested overseas … should benefit from an earnings repatriation holiday. Stocks in our High Overseas Earnings basket hold $1.7 trillion of permanently reinvested foreign earnings, equal to 70 percent of the $2.4 trillion held by all S&P 500 firms"

HAPPENING TODAY: WEISS AT THE NYFRB — Via a Treasury official on Monday's Treasury conference at the Federal Reserve Bank of New York: "Antonio Weiss is delivering one of a number of speeches and he plans to articulate a view on transparency in the Treasury market in the wake of the last week's FINRA rule becoming final that will allow the official sector to start collecting Treasury cash market data in July." Full agenda/webcast.^[8]

CHINA ON A BUYING SPREE — Per new Bloomberg graphic showing "Chinese companies are buying up overseas assets at a faster pace than U.S. buyers for the first time on record." Graphic^[9].

RYAN'S DAYS AS SPEAKER NUMBERED? — Stan Collender in Forbes: "Never mind the next Congress: It now looks like Ryan could be deposed or forced to resign this Congress in the lame duck session that begins a week after Election Day. In other words, Ryan may no longer be speaker about four weeks from now.

"I say this after hearing from several highly reliable sources that the House Freedom Caucus is seriously considering doing to Ryan what it did to former Speaker John Boehner (R-Ohio) by threatening him with a privileged motion to vacate the chair. If a majority of the House supported the motion, Ryan would be removed immediately as speaker." Read more.^[10]

TRUMP WIN COULD CRUSH MARKETS — POLITICO's Ben White: 'Wall Street is set up for a major crash if Donald Trump shocks the world on Election Day and wins the White House. New research out on Friday suggests that financial markets strongly prefer a Hillary Clinton presidency and could react with panicked selling should Trump defy the polls and deliver a shocking upset on Nov. 8. …

"The new report suggests that the stock market is worth 11 percent more under a Clinton presidency than a Trump presidency. This is a highly unusual circumstance because markets historically prefer Republican policies on taxes, regulation and trade to those of Democrats. … Current market action is the direct reverse of what happened in 2012 when President Barack Obama was running for reelection against former Massachusetts Gov. Mitt Romney. When Romney clearly beat Obama in the first debate, markets rallied" Read more.^[11]

GOOD MONDAY MORNING — Only 15 days to go! Email me on bwhite@politico.com^[12] and follow me on Twitter@morningmoneyben^[13]. Email Andrew Hanna on ahanna@politico.com^[14] and follow him on Twitter @andrewbhanna^[15].

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Patrick Temple-West on a looming CFTC move against high-frequency traders — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600^[16] or info@politicopro.com^[17].

DRIVING THE WEEK — Donald Trump campaigns in Florida on Monday and Tuesday before heading to North Carolina … Hillary Clinton campaigns with Elizabeth Warren in New Hampshire on Monday before heading to Florida on Tuesday, North Carolina on Wednesday and Iowa on Thursday … Case-Shiller house prices on Tuesday at 9:00 a.m. expected to rise 0.2 percent … Consumer Confidence at 10:00 a.m. on Tuesday expected to dip to 101.0 from 104.1 … First look at third quarter GDP on Friday at 8:30 a.m. expected to show growth of 2.5 percent … MM's dream World Series, Cubs-Indians, begins Tuesday.

** A message from JPMorgan Chase & Co.: If just 1 in 3 small businesses hired 1 person, the U.S. could close the gap on unemployment. That's why JPMorgan Chase is doubling the size of its commitment to $75 million for their global Small Business Forward program, which is helping women, minority and veteran-owned small businesses expand. Learn more: http://bit.ly/2erx9AY^[18] **

TRUMP'S 3:00 A.M. CALL … FROM CITIGROUP — An eagle-eyed reader found this post from Trump on his Trump University web site: "It's a familiar scenario to me, because one night at 3am, when I was more than $9 billion in debt, I was summoned to Citibank for a conference call with a bevy of international bankers to whom I owed money.

"It was pouring rain and I couldn't get a cab, so I had to walk to the bank, 15 blocks from Trump Tower. By the time I got there I was soaked. I felt then like I had reached my lowest point. But we worked things out, and the rest, as they say is history. They also say it's darkest before the dawn. You know what I say: Never ever give up." Read more.^[19]

NEWS OF THE WEIRD — Iceland is on the cusp of being ruled by the Pirate Party. Not making this up. Read more^[20].

IF YOU WENT TO BED EARLY .. Ask someone about the Sunday Night Football game between Arizona and Seattle that ended in a 6-6 tie in incredibly bizarre fashion.

'TRUST' US — FT's Matthey Garrahan: "AT&T faces an uphill battle to convince US regulators that its proposed $85.4bn purchase of Time Warner will not unfairly distort the media and communications industries after opponents of the deal said the combined entity would wield too much market power.

"The purchase faces at least a year of regulatory scrutiny. In a joint statement, senators Mike Lee and Amy Klobuchar, the chairman and ranking member of the Senate antitrust subcommittee, said the deal 'would potentially raise significant antitrust issues, which the subcommittee would carefully examine'." Read more^[21].

MASSIVE SKEPTICISM — NYT's Michael J. de la Merced: "Reaction to AT&T's $85.4 billion purchase was swift — and, outside of Wall Street, full of skepticism. Much of the concern was rooted in how consumers have fared since Comcast bought NBCUniversal, a deal that provided a template for the consolidation of media and telecommunications. … [C]ombining a telecommunications company with a media company, in particular, raises questions about whether consumers would have less choice because the conglomerate both creates its own content and provides the pipes" …

"In a statement, the top Republican and Democrat on the Senate Judiciary Committee's antitrust subcommittee said they planned to hold a hearing on the deal. And even competitors like Disney quickly chimed in, urging regulators to pay close attention in their review. At issue is whether AT&T, with over 100 million subscribers across its wireless, broadband and DirecTV offerings, will somehow favor its own customers when it comes to HBO, CNN and Warner Bros. properties like the Batman and Harry Potter franchises" Read more.^[22]

A LONG AND UPHILL BATTLE — FT's Matthew Garrahan: "The purchase faces at least a year of regulatory scrutiny. In a joint statement, senators Mike Lee and Amy Klobuchar, the chairman and ranking member of the Senate antitrust subcommittee, said the deal 'would potentially raise significant antitrust issues, which the subcommittee would carefully examine'.

"'I think AT&T is going into this knowing they have an uphill battle,' said Amanda Wait, an antitrust partner at Hunton & Williams, a Washington law firm. 'Any Clinton administration will take a tough look at it. The key issues here will be whether owning Time Warner content harms competition or whether it makes AT&T stronger.'" Read more.^[23]

HOW IT COULD SUCCEED — WP's Brian Fung: "[T]he FCC's involvement hinges on whether Time Warner sells certain assets to AT&T. If the FCC is excluded from the process, it could weaken regulators' ability to prevent harm to competition, said Gene Kimmelman, a former Justice Department antitrust official who is now president of the consumer advocacy group Public Knowledge. …

"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 the station 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" Read more^[24].

GAME OVER — WSJ'S Robert McMillan and Rory Jones: "The computerized attack that left more than 1,200 websites unreachable on Friday stemmed from efforts, years earlier, by players of online games to frustrate and slow their opponents, security experts say.

"Several security experts say the computer instructions for the attack had been refined from code written by disaffected videogame players calling themselves Lizard Squad who launched attacks on Christmas Day 2014 against online-game services operated by Sony Corp. and Microsoft Corp." Read more^[25].

AIRBNB PUNCHES BACK — NYT's Katie Benner Hours after Gov. Andrew M. Cuomo of New York signed a bill that would impose steep fines on Airbnb hosts who break local housing regulations, Airbnb filed a federal lawsuit contending the new law would cause it 'irreparable harm.'"

"The new law in New York allows authorities to fine hosts up to $7,500 if they are caught listing a property on a rental platform such as Airbnb." Read more^[26].

MAY CALLS FAMILY MEETING — Reuter's Kylie MacLellan: "Representatives of the Scottish, Welsh and Northern Irish governments will get a chance to tell Brexit minister David Davis how they hope Britain's future relationship with the EU will work, under plans the government announced on Monday.

"At a meeting on Monday, Prime Minister Theresa May will offer the leaders of the three devolved governments, which have varying degrees of autonomy, formal discussions on Brexit at least twice before the end of the year, her office said." Read more^[27].

JUST CAPITAL — POLITICO's Colin Wilhelm: "A top banking regulator is likely to include capital requirements for startups if it offers them a national charter, a decision that could discourage companies from pursuing the charter that several of them have long sought.

"Industry stakeholders, as well as regulators themselves, say that a limited-purpose fintech charter from the Office of the Comptroller of the Currency will probably include some kind of capital requirements similar to what a bank would face." Read more^[28].

RUSSIA TO MEET WITH OPEC — Reuter's Rania el Gamal and Reem Shamseddine: "Saudi Arabia's Energy Minister Khalid al-Falih said on Sunday he had invited his Russian counterpart Alexander Novak to meet Gulf Arab energy ministers in Riyadh as part of efforts to cooperate with non-OPEC members to stabilize the oil market.

"Falih said Novak had welcomed the invitation, 'as a clear indication of sincere desire to continue cooperation and coordination with the oil producing and exporting countries for more stability in the market.'" Read more^[29].

ALSO FOR YOUR RADAR —

WHAT TRUMP MEANS FOR BANKS — American Ian McKendry: "Despite more than a year of campaigning and discussing various issues … Trump remains a huge question mark when it comes to banking policies — making it unclear exactly what his priorities would be if he succeeds in seizing the White House. …

"During the campaign, he's vacillated between populist views like calling for the return of Glass-Steagall and more traditional conservative ones like favoring a reduction in regulation. It makes it hard to gauge his real agenda, observers said." Read more^[30].

COULD OBAMA TEAM STICK AROUND? — Via POLITICO's Lorraine Woellert: "Meet the new boss: Same as the old boss? Hillary's coattails are looking short, making it increasingly likely she'll have to deal with a divided — and cranky — Senate.

"To preserve political capital, she might want to skip a few confirmation battles, and a growing school of thought in Washington says she'll ask some Obama people to stick around. HUD Secretary Julian Castro might be one of them. Housing is shaping up to be a low policy priority and there's no burning need to make a strong political statement."

FIRST LOOK: NEW GSE REPORT — American Action Forum's Douglas Holtz-Eakin has a new piece on Monday on the CBO's recent analysis on the recap and release bill for Fannie Mae and Freddie Mac: "The best course forward is real GSE reform. But in the absence of that, the worst thing is to pursue faux reforms that enable turning back the clock." Read more^[31].

** A message from JPMorgan Chase & Co.: Over the next three years, JPMorgan Chase is doubling the commitment to their Small Business Forward program. That's $75 million to support women, minority and veteran-owned small businesses through a series of approaches to help build long term success, creating local, inclusive economic growth. With small businesses growing fastest among people of color, particularly Latinas and African American women, it's essential to help them get started and growing. The expansion of Small Business Forward is based on learnings from ongoing partnerships with CDFIs, as well as the creation of the National African American Small Business Loan Fund with VEDC and Entrepreneurs of Color Fund with Detroit Development Fund. **

References

1. ^{^} blockbuster weekend bid (www.wsj.com)
2. ^{^} vowing to block (www.wsj.com)
3. ^{^} Read more (blogs.ws j.com)
4. ^{^} proposed merger (www.politico.com)
5. ^{^} Read more (www.politico.com)
6. ^{^} AT&T to Buy Time Warner in $85.4 Billion Cash, Stock Deal (2) (www.bloomberg.com)
7. ^{^} Read more (www.bloomberg.com)
8. ^{^} Full agenda/webcast. (www.newyorkfed.org)
9. ^{^} Graphic (www.bloomberg.com)
10. ^{^} Read more. (www.forbes.com)
11. ^{^} Read more. (www.politico.com)
12. ^{^} bwhite@politico.com (www.politico.com)
13. ^{^} @morningmoneyben (www.twitter.com)
14. ^{^} ahanna@politico.com (www.politico.com)
15. ^{^} @andrewbhanna (www.twitter.com)
16. ^{^} (703) 341-4600 (www.politico.com)
17. ^{^} info@politicopro.com (www.politico.com)
18. ^{^} http://bit.ly/2erx9AY (bit.ly)
19. ^{^} Read more. (web.archive.org)
20. ^{^} Read more (www.washingtonpost.com)
21. ^{^} Read more (www.ft.com)
22. ^{^} Read more. (www.nytimes.com)
23. ^{^} Read more. (www.ft.com)
24. ^{^} Read more (www.washingtonpost.com)
25. ^{^} Read more (www.wsj.com)
26. ^{^} Read more (www.nytimes.com)
27. ^{^} Read more (www.reuters.com)
28. ^{^} Read more (www.politicopro.com)
29. ^{^} Read more (www.reuters.com )
30. ^{^} Read more (www.americanbanker.com)
31. ^{^} Read more (www.americanactionforum.org)