FCC Brings in Outsiders as Review of AT&T/DirecTV, Comcast/TWC Intensifies
FCC Chairman Tom Wheeler is bringing in economists and lawyers from outside the agency to oversee the review of Comcast’s proposed buy of Time Warner Cable and AT&T’s of DirecTV, the agency said Monday. Both teams will be under the overall direction of FCC General Counsel Jonathan Sallet.
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Hillary Burchuk, a former Department of Justice lawyer who previously moved to the FCC, is heading up the Comcast/Time Warner Cable working team, with Bill Dever from the Wireline Bureau as her deputy, the FCC said (http://bit.ly/1qEiLXh). Meanwhile, Jamillia Ferris, formerly a partner at Hunton & Williams, will join the Office of General Counsel to head the AT&T/DirecTV review team. Ferris is a former chief of staff of the Justice Department Antitrust Division, who at one point was considered a top candidate to be named to the FTC, industry officials said in interviews Monday. Elizabeth Andrion from the Office of Strategic Planning & Policy Analysis will be her deputy.
William Rogerson, a former FCC chief economist who teaches at Northwestern University, will be senior economist overseeing both deals. He will be joined by Shane Greenstein, also of Northwestern University, as senior economic consultant. Other current FCC officials will also be involved, including Chief of Staff Ruth Milkman, Senior Counsel Phil Verveer and Wheeler aides Gigi Sohn and Maria Kirby, Milkman said in email to staff. The agency said the chiefs of the Media, International, Wireline and Wireless bureaus will also serve under Sallet on the steering committee. The four companies declined to comment. Sallet was widely seen as a key FCC staffer as the FCC readied its proposed net neutrality rules.
Rick Kaplan, NAB executive vice president, said Wheeler is following a model established by former FCC Chairman Julius Genachowski. Adding outside help “makes a lot of sense given how significant these transactions are, and given that the agency cannot predict when they may happen,” Kaplan said. “The chairman has clearly placed a high priority on their review, as he has put in charge of the review teams two highly qualified antitrust lawyers who know the subject matter and have deep ties with the Justice Department. There is no doubt the FCC will give these two transactions a great deal of attention.” Kaplan was chief of the Wireless Bureau under Genachowski during its review of the failed AT&T/T-Mobile.
The group selected is especially “strong,” said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation. “If there were any doubt that the agency will take a hard look at these cases, it should be dispelled by now.” While Verveer isn’t listed as a major player, “he is certainly one of the most knowledgeable and experienced attorneys in the field, and I'm sure the chairman will be able to use him as a sounding board as things proceed,” Schwartzman said.
'Tight’ Review
The moves show both deals will undergo a “tight” review, said Paul Gallant, analyst at Guggenheim Securities. It’s also interesting that both deals will have some joint staff oversight, he said. “Given the potential for the mergers to collectively affect the content market, this is probably welcome from the studios’ perspective. But right now, there aren’t many data points on the deals, so it’s also pretty easy to over-interpret things like staffing announcements."
A former FCC spectrum official who doesn’t represent any of the companies in the deals questioned why the commission needs to hire outside staff. Wheeler appears to be following Genachowski’s lead, the lawyer said. “Given that the building is teeming with seasoned experts possessing decades of transactional experience, his rationale is not immediately apparent.” Several communications industry lawyers noted that before Genachowski the FCC, took on such deals as AT&T/BellSouth, AT&T/Cingular, Ameritech/SBC and Dish Network/DirecTV, without calling in outside experts.
Free State Foundation President Randolph May said the reliance on outsiders “perhaps unjustifiably” raises questions about in-house expertise at the agency. “I know these are ‘big’ mergers, but that does not mean that they raise issues that require the agency to add to the size of its bureaucracy,” he said. “Maybe the fact that the last two chairmen feel like the current staff can’t process the mergers without additional outside assistance really bolsters the argument for transaction review reform that would shift most of the FCC’s merger review responsibilities to the antitrust authorities."
Public Knowledge Senior Vice President Harold Feld cautioned against reading too much into Wheeler’s moves, but said the selections put a strong emphasis on the Office of General Counsel and DOJ. The appointment of a Wireline Bureau official to the Comcast/Time Warner Cable team shows “the agency will clearly focus very heavily on the Internet and interconnection arguments rather than treating this as a pure cable merger,” he said. “The same is true of putting someone from OSP as deputy of ATT/DirecTV, rather than someone from either the Wireless Bureau or the Media Bureau.” The makeup of the teams shows that Wheeler wants a focus on the implications for broadband rather than just media competition, Feld said. “That’s a good sign that Wheeler understands the impact of these mergers and that the agency is unlikely to treat these transactions as ‘just’ a cable deal while ignoring the questions raised about the future of broadband competition.” The economists and the lawyers both have strong antitrust backgrounds, he added. “This is important because if the agency takes an aggressive position on review, merger supporters will invariably accuse the agency of ignoring antitrust and trying to pursue a more regulatory agenda.”,