CI VIEW: AT&T CEO Stephenson takes on Google’s Schmidt as Time Warner bid heralds new US antitrust regime UPDATE

WASHINGTON (BBN) – (Updating on January 24, 2017 to add comment from US Federal Trade Commission (FTC) Commissioner Maureen K. Ohlhausen)  AT&T (NYSE: T) USD 85.4 bin dollar bid for Time Warner (NYSE: TWX) is seen marking the end of Alphabet (NYSE: Goog) and Facebook (NYSE:FB) dominant position in the US media market and heralding new antitrust action by the incoming administration of President Donald Trump.

[21st Century Fox  and News Corp  Executive Chairman Rupert Murdoch speaks to Capitol Intelligence/Black Business News (BBN) using CI Glass on AT&T bid for Time Warner at The Wall Street Journal CEO Council Summit in Washington, DC. November 15, 2016]

The incoming administration of Donald Trump is looking at taking long overdue antitrust action both by the Justice Department and US Federal Trade Commission as the outgoing administration of Barack Obama gave a “free ride to Google, Facebook and Silicon Valley,” a Washington DC antitrust attorney close to the Trump transition team said.

AT&T CEO Randall L. Stephenson is reinventing AT&T into a content delivery company following its acquisition of Direct TV for USD 67 bln and the takeover of Time Warner and its main content units HBO and CNN.

Donald Trump said during the campaign he would block AT&T takeover of Time Warner, the antitrust source said Trump spoke too soon as the AT&T bid poses fewer antitrust issues as it is a vertical integration and not a takeover of another wireless carrier as AT&T’s failed bid to acquire Deutsche Telekom unit T-Mobile in 2011.

[AT&T CEO Randall Stephenson, Time Warner CEO Jeffrey Bewkes and Shark Tank Mark Cuban speak with Capitol Intelligence/BBN using CI Glass ahead of testifying at US Senate Judiciary Subcommittee on Antitrust regarding AT&T takeover of Time Warner. December 6, 2016.]
Stephenson said he sees the main driver for wireless carriers will be video on demand and the ability to have must see content on the AT&T network as opposed to recycled content on social media platforms like Youtube, Facebook, Snapchat, Instagram and twitter.

“A new Renaissance of original content is about to happen.  Everyone knows that social media biggest weakness is that it depends on others for free content.,” a top M&A media lawyer said.

The AT&T deal will also happen after the Trump administration replaces Tom Wheeler as Federal Communications Commission (FCC) Chairman.  The former lobbyist, Wheeler has been consistently closer to Silicon Valley interests than those represented by traditional media owners such as 21St Century (NASDAQ: FOXA) and News Corp (NASDAQ: NWS) Executive Chairman Rupert Murdoch and minority owned media operators.

[Federal Communications Commission Chairman Tom Wheeler speaks to Capitol Intelligence/BBN using CI Glass at Newseum following National Journal IP Transition conference on Feb. 6, 2014]

Speaking to Capitol Intelligence/BBN at the Wall Street Journal CEO Council event in Washington, DC, Murdoch said the AT&T deal brings the debate regarding net neutrality – the principle that internet service providers should enable access to all content and applications regardless of the source – closer to his point of view rather than that of Google.

Jonathan Sallet, the FCC general counsel at the FCC who killed the proposed takeover Time Warner Cable by Comcast, is currently reviewing the AT&T/Time Warner deal in his new position as Deputy Assistant Attorney General for Litigation for the Antitrust Division of the US Department of Justice.

[Deputy Asst. Attorney General for Litigation for the Antirust Division of the US Dept. of Justice Jonathan Sallet filmed by Capitol Intelligence/BBN using CI Glass regarding AT&T  bid for Time Warner at ABA Antitrust Fall Forum held at the National Press Club of Washington, DC. November 17, 2016]

Following a speech titled “Division Perspectives On Vertical Issues” at the American Bar Association Fall Antitrust Forum, Sallet refused to comment on the AT&T bid for Time Warner or whether he will be resigning from the Justice Department.

Sallet is a close confidant of FCC chairman Tom Wheeler and is tied with former Vice President Al Gore in Democratic party circles.  He was the main person at the FCC in blocking the proposed merger between Comcast (NASDAQ: CMCSA) and Time Warner Cable (TWC).

[U.S.Federal Trade Commission Commissioner Maureen K, Ohlhausen speaks to Capitol Intelligence/BBN using CI Glass on US FTC action regarding Alphabet (NYSE: GOOG) at Heritage Foundation symposium Antitrust Policy for a New Administration. Washington, DC. January 24, 2017]

The US FTC concluded in 2012 that Google Inc under Executive Chairman Eric Schmidt used anti-competitive tactics and abused its monopoly power in ways that harmed Internet users and rivals, the Wall Street Journal reported in March last year based on a leaked FTC report.

The report recommended that the FTC bring a lawsuit challenging three Google practices which would brought highest profile antitrust lawsuit since the DOJ sued Microsoft Corp in the 1990s and the 13-year IBM antitrust battle in 1976.

In fact, Eric Schmidt became the Washington DC lobbyist for Google founder Larry Page and Sergey Brin almost immediately after Obama took office.

[Google Executive Chairman Eric Schmidt speaks to Capitol Intelligence using Google Glass at New America Foundation. Washington, DC, May 22, 2014]

There has been a revolving of Google executive at White House and Google was the second-largest largest corporate source of campaign donations to President Barack Obama and by far the biggest Silicon Valley cheerleader for Hillary Clinton.

Eric Schmidt, unlike Larry Page and Sergey Brin, is not afraid to meet the public and socialize with people who do not come from the West Coast tech world.  Schmidt is so DC savvy he was the keynote speaker at a closed press event hosted by Supreme Court Justice Ruth Bader Ginsburg at the Supreme Court and organized by the Davos WEF-like Salzburg Global Seminar in November 2014.

Late Supreme Court Justice Antonin Scalia was frequently criticized for socializing privately with business owners and others who may have or had business with the Supreme Court.

In fact, the stock market is showing that the social media bubble as witnessed by the almost USD 50bn for Uber, USD 30bn for Airbnb and Google and Facebook’s current market caps will meet the same fate, and most probably worse, than the dot.com bubble crash of 2000.

[Cisco Systems Chairman John Chambers speaks to Capitol Intelligence/BBN using CI Glass at New Economy Forum at IMF World Bank annual meetings in Washington, DC. October 5, 2016]

Cisco Systems Chairman and Founder John Chambers said  market corrections are normal and predicts that 40% of companies existing today will no longer be around in five or so years.

By PK Semler in Washington, DC. For information please call +1-202-549-3399 or email pks@capitolintelgroup.com

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