As AT&T Inc. and Time Warner Inc. seek government approval for their $85 billion megadeal, some of their most important negotiations may take place in private conversations with rival executives instead of in the nation’s capital.
The merger offers competitors and partners a rare opportunity to cut more favorable deals with both companies in exchange for their public endorsement, which can be valuable in getting regulators to sign off. Meanwhile, other pay-TV providers and programmers will lobby to block the deal or place limits on an empire that would own many of the movies and shows it delivers to wireless, internet and video subscribers.
“The part you never see is what the various players demand behind the scenes in order to support the deal in Washington,” said Craig Moffett, an analyst at MoffettNathanson LLC. “You’ll have all kinds of programmers essentially demanding a pound of flesh. It’s a gravy train for everybody.”
A hint of that back-channel dealing popped up two years ago. Discovery Communications Inc., owner of TLC and Animal Planet, argued against Comcast Corp.’s purchase of Time Warner Cable Inc., saying it would use its bigger size to hurt TV networks. In response, Comcast claimed that Discovery had demanded “unwarranted business concessions,” like higher carriage fees and greater distribution of its channels, in exchange for not opposing the merger. Discovery denied Comcast’s claim at the time. Both companies declined to comment last week on that old dispute.