WEBVTT - Judge Allows AT&T’s $85 Billion Time Warner Purchase

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash Podcasts. Now, turning to

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<v Speaker 1>the A T and T Time Warner deal, Federal Judge

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<v Speaker 1>Richard Leon rejected the Justice Department's bid to block that

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<v Speaker 1>proposed billion dollar acquisition of Time Warner, a decision that

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<v Speaker 1>could lead to much more consolidation in the media sector.

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<v Speaker 1>Just after the decision was announced, A T and T

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<v Speaker 1>s lead lawyer Daniel Petrocelli addressed the media. I've been

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<v Speaker 1>asked by many people, what is the significance of this

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<v Speaker 1>transaction on many other deals that are appending in the marketplace.

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<v Speaker 1>You know, my answer to that is that each and

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<v Speaker 1>every one of these transactions stands on its own, as

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<v Speaker 1>this one did. Joining us is Marianne Halford, global Media

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<v Speaker 1>and Entertainment strategist at O C and C Strategy Consulting. Marianne,

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<v Speaker 1>do you agree with Petrocelli or will consolidation accelerate and

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<v Speaker 1>big media grow bigger? Well? I agree on both fronts. Um.

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<v Speaker 1>I think each deal will be looked at on its own.

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<v Speaker 1>But I think this has been an awesome month. It

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<v Speaker 1>is an awesome month now for anybody who is a

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<v Speaker 1>telco communications operator because the world is now open for

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<v Speaker 1>vertical integration in in a way that I think is

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<v Speaker 1>fairly significant. UM. Needless to say, we know Comcast will

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<v Speaker 1>be issuing its formal bid either today or tomorrow. Many

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<v Speaker 1>say today. Um, but you know what what does Charter

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<v Speaker 1>wind up doing? Do they start to enter into the fray?

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<v Speaker 1>What will other companies start doing in this space? And

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<v Speaker 1>also they have another wind behind their backs right now,

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<v Speaker 1>and another reason to want to buy up some of

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<v Speaker 1>these valuable mediasets is the fact that net neutrality is

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<v Speaker 1>is fading away. At the same time, the media companies

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<v Speaker 1>all know that they need to go direct to consumer. Um.

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<v Speaker 1>They do not want to be running into the arms

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<v Speaker 1>of Google and Facebook and Amazon. They want to figure

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<v Speaker 1>out how they can get direct access to consumers. And

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<v Speaker 1>given that they have been working with a number of

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<v Speaker 1>these larger operators for years and years, I think they

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<v Speaker 1>may feel a little bit more comfortable embracing their arms

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<v Speaker 1>than uh, those of the fangs if you will, um

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<v Speaker 1>out in California. Um, so yes, I think there'll be

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<v Speaker 1>a lot more activity coming coming on board here and

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<v Speaker 1>it will be an exciting space to watch over the

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<v Speaker 1>coming months. Marianne, what do you think are the chances

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<v Speaker 1>that the Justice Department will appeal this ruling? You know,

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<v Speaker 1>of course we're not talking about our normal presidency, so

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<v Speaker 1>we're not necessarily always talking about a normal Justice Department either. Um.

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<v Speaker 1>I think it's been actually quite interesting that it's been

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<v Speaker 1>somewhat silent and quiet. Um in some respects. I don't

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<v Speaker 1>know if this is a fight that they want to

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<v Speaker 1>pursue right now. Um, there's a lot of other things happening. Um.

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<v Speaker 1>The judge really didn't give them a lot of leeway

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<v Speaker 1>for appealing, because really the judge basically didn't listen, don't

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<v Speaker 1>don't don't bother that requesting a stay. He says, I'm

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<v Speaker 1>not going to grant one. But it's based on whether

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<v Speaker 1>he did, whether there are any errors during the trial.

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<v Speaker 1>It's not based on what the judge says, which was

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<v Speaker 1>don't appeal. That's true, that's true, but you know, let's see,

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<v Speaker 1>I'm not sure I really can't make a judgment there

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<v Speaker 1>so UM, let's taking let's say that they don't appeal.

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<v Speaker 1>What will this decision do you think have any effect

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<v Speaker 1>on whether the government opposes future media deals? Well, I

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<v Speaker 1>think this one was a unique situation. UM. You know, listen,

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<v Speaker 1>Jeff Zucker is the guy that actually allowed Donald Trump

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<v Speaker 1>to run for president because he's the guy that green

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<v Speaker 1>let the Apprentice, and then Trump's expected Zucker to be

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<v Speaker 1>very kind to him on CNN, and he was trying

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<v Speaker 1>to be, if you will, UH, a proper journalistic institution.

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<v Speaker 1>So it was a very interesting and unique situation. Um.

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<v Speaker 1>You know, clearly, when UH Disney announced its intense to

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<v Speaker 1>buy Fox, Trump applauded that deal. Though that's a horizontal

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<v Speaker 1>merger and not a vertical merger. UM, I don't know.

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<v Speaker 1>I think I go back to petor Chilly here is

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<v Speaker 1>that each decision is going to have to be evaluated

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<v Speaker 1>on its own, and UH, given the President of the

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<v Speaker 1>United States who he is and his varying opinions on

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<v Speaker 1>different things, that it will depend upon each situation. All

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<v Speaker 1>that's being said, though, I still think there's going to

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<v Speaker 1>be a lot more consolidation going on. Um, it's clear

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<v Speaker 1>that does that mean higher prices? Will that mean higher

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<v Speaker 1>prices for consumers? Got to get that question. I think

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<v Speaker 1>ultimately you can wind up see I mean, first of all,

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<v Speaker 1>you got have the the uh, the combining of net

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<v Speaker 1>neutrality and this decision coming together all at the same time.

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<v Speaker 1>I think could wind up leading to higher prices. And

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<v Speaker 1>also the media companies are going to be more and

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<v Speaker 1>more resistant, if you know, if they wind up continuing

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<v Speaker 1>to get bought up by these larger companies, they're going

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<v Speaker 1>to become more and more resistant to providing content to

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<v Speaker 1>the uh, the amazons and to the net is as well.

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<v Speaker 1>In fact, with Netflix they're all uh holding back a

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<v Speaker 1>lot of their content now, um, and that will continue.

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<v Speaker 1>So yes, I do think you could see higher prices

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<v Speaker 1>for consumers, um, not right away, but over time. Yes,

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<v Speaker 1>all right, thanks so much, Marianne. That's Marianne Halford. She

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<v Speaker 1>is with O C and C Strategy Consulting. A reminder,

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<v Speaker 1>you can listen to all of today's interviews, as well

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<v Speaker 1>as past episodes of the show anytime on Bloomberg dot

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<v Speaker 1>com slash podcast. That's Bloomberg dot com slash podcast. Omb

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<v Speaker 1>director and acting cfp B chief Mick mulvaney told reporters

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<v Speaker 1>yesterday the Trump administration will adhere to a June twenty

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<v Speaker 1>second deadline to pick a permanent director for the Consumer

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<v Speaker 1>Protection Agency. Speaking with Bloomberg earlier this year, mulvaney said

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<v Speaker 1>that the head of the CFPB, no matter who it is,

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<v Speaker 1>has too much power. My objections to the bureau remain

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<v Speaker 1>the same, which is the structure is completely Um, it's irrational.

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<v Speaker 1>I have way too much authority as an individual. Jesse

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<v Speaker 1>Westbrook's Bloomberg News Financial regulation editor. He joins us now

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<v Speaker 1>by phone for more on this story, and Jesse, some

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<v Speaker 1>interesting names getting kicked around here on who might replace

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<v Speaker 1>mcmilvany and become the permanent CFPB director. Who are they? Yeah,

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<v Speaker 1>I mean some of the people are being interviewed are

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<v Speaker 1>darryl Issa, a Republican congressman from Orange County. UM. Obviously

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<v Speaker 1>his political career in Congress is is sort of nearing

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<v Speaker 1>an end, so maybe he's looking for work. We Uh,

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<v Speaker 1>we have others such as, uh, the guy who runs

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<v Speaker 1>the credit union regulator. UM. I mean, I think you

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<v Speaker 1>consistently expect that all of these people will continue the

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<v Speaker 1>work that mcmilvany is doing. Of sort of defanging this

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<v Speaker 1>watchdog and irritating Democrats on Capitol Hill. Do you see

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<v Speaker 1>any pattern in the people's names that have been mentioned

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<v Speaker 1>so far. I don't know that there's a pattern. I mean,

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<v Speaker 1>they're there. They are all conservative Republicans, people who have

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<v Speaker 1>a different attitude to regulation than than what we saw

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<v Speaker 1>under the Obama administration. Um. I mean, it's it's a

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<v Speaker 1>routine thing that once people come to the swamp and

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<v Speaker 1>they have political careers, and those political careers start start

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<v Speaker 1>running dry, they start looking for jobs elsewhere. I mean,

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<v Speaker 1>you know, it's it's interesting, particularly on the Republicans side.

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<v Speaker 1>You know a lot of the people who criticize all

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<v Speaker 1>these agencies, but then they often end up working at them. Well,

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<v Speaker 1>we know that that mcmulvaney has been highly critical of

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<v Speaker 1>the agency. He's been trying to roll back at least

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<v Speaker 1>some of its enforcement and actions. But for any real

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<v Speaker 1>change around the authority of the CFP director director or

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<v Speaker 1>the structure of the CFPB, that would be up to Congress. Yeah,

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<v Speaker 1>that's right, I mean, and and that requires sixty votes.

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<v Speaker 1>And and that's why in the Big Dot Frank rollback bill,

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<v Speaker 1>we just saw that the past Congress nothing touching the

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<v Speaker 1>CFPP was in there because there are not sixty votes

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<v Speaker 1>to to rip up and and and overhaul the CFPB.

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<v Speaker 1>But if if you have someone who doesn't believe in

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<v Speaker 1>the mission of the agency running the place, you know

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<v Speaker 1>they can not sue companies. They can take sort of

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<v Speaker 1>a lass affair attitude to enforcing rules. Um, they can

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<v Speaker 1>reassign staffers to unimportant jobs. I mean, there's a lot

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<v Speaker 1>you can do if you do not believe in the

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<v Speaker 1>mission of an agency. So Jesse obviously Nick mulvanny didn't

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<v Speaker 1>have to go through a Senate confirmation hearing. But for

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<v Speaker 1>someone else who wants to take this job, who is

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<v Speaker 1>nominated to take this job, who doesn't like the agency

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<v Speaker 1>basically or doesn't support the agency's mission, will they have

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<v Speaker 1>a hard time getting Senate confirmation. I I don't think so,

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<v Speaker 1>because remember, you don't need sixty votes to get confirmed

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<v Speaker 1>in the Senate um. All you need is a is

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<v Speaker 1>a simple majority. That's unlike legislation. I have a hard

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<v Speaker 1>time believing that in most cases Republicans in the Senate

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<v Speaker 1>are are not going to approve Trump's nominees um, particularly

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<v Speaker 1>for this agency that is not liked by the financial

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<v Speaker 1>services industry, which donates a lot of money to Republican lawmakers.

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<v Speaker 1>So I understand that the CFP director director, no matter

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<v Speaker 1>who it is, has some flexibility in bringing enforcement cases.

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<v Speaker 1>But there are certain enforcement cases that might be particularly egregious.

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<v Speaker 1>Uh you know, I'm thinking here about all the problems

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<v Speaker 1>Wells Fargo. I mean, so, so there are there are

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<v Speaker 1>minimum things that the agency would do. Is that fair

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<v Speaker 1>to say? Oh? Yeah, I mean a percent? And and

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<v Speaker 1>the fine imposed on Wells Fargo under McK mulvaney was

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<v Speaker 1>the agency's biggest fine ever billion dollars. Wasn't well it was.

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<v Speaker 1>It was a billion dollars shared with the Office of

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<v Speaker 1>the Controller of the Currency. But but whether it was

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<v Speaker 1>shared or not, it was still the biggest fine the

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<v Speaker 1>agency has ever done. What was interesting about that is

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<v Speaker 1>you probably remember Trump's tweet that they were gonna, you know,

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<v Speaker 1>come down hard on Wells Fargo. So was that a

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<v Speaker 1>one off or was mulvaney pleasing his boss? I guess

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<v Speaker 1>that's a question for mc mulvaney. Yes, we will find

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<v Speaker 1>out about that one off. It seems like it is.

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<v Speaker 1>But let's change topics here a little bit. Six Senate

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<v Speaker 1>Democrats are asking the SEC's internal watchdog to investigate a

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<v Speaker 1>Republican commissioner who berated City Group over its stance on

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<v Speaker 1>companies that sell guns. Tell us more about that. Yeah,

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<v Speaker 1>so this is an interesting story. A few weeks ago,

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<v Speaker 1>a bunch of executives from City Group were we're inside

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<v Speaker 1>the SEC ostensibly to talk about derivatives regulation and esoteric

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<v Speaker 1>topic to the rest of us, but something that is

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<v Speaker 1>very important to banks because they are heavily engaged in

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<v Speaker 1>the derivatives markets. And and as the meeting was sort

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<v Speaker 1>of running to an end, this Republican Commissioner, Michael pawar

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<v Speaker 1>Uh started blasting City Group over their decision to stop

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<v Speaker 1>financing UM companies that were doing business with gun gun dealers,

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<v Speaker 1>and Uh and City Group executives were sort of taken aback.

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<v Speaker 1>They they didn't think that they would go into the

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<v Speaker 1>SEC and and get a tongue lashing about their gun policy.

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<v Speaker 1>But that's indeed what happened. And now a Democratic lawmaker,

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<v Speaker 1>Chris van Holland and in a handful of his Democratic colleagues,

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<v Speaker 1>want the SEC Inspector General to investigate this and and

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<v Speaker 1>make a conclusion about whether this was proper conduct by

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<v Speaker 1>an SEC Commissioner Jesse Westbrook, Bloomberg News Financial Regulation Editor,

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<v Speaker 1>thank you for all of that. Thanks for listening to

0:13:09.760 --> 0:13:13.040
<v Speaker 1>the Bloomberg Law Podcast. You can subscribe and listen to

0:13:13.120 --> 0:13:16.880
<v Speaker 1>the show on Apple Podcasts, SoundCloud, and on bloomberg dot

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<v Speaker 1>com slash podcast. I'm June Grasso. This is Bloomberg