Analysts: Sprint's scuttling of T-Mobile deal takes regulatory pressure off pay-TV mergers

The reported decision by Sprint (NYSE: S) to end its $32 billion quest to buy T-Mobile (NYSE:TMUS) will provide a significant regulatory boost to Comcast (NASDAQ: CMCSA) in its $45 billion attempt to buy Time Warner Cable (NYSE: TWC), and AT&T (NYSE: T) in its $49 billion effort to buy DirecTV (NASDAQ: DTV).

So say several prominent media investment analysts, who believe the influence exhibited by the Federal Communications Commission in ending a Sprint/T-Mobile deal before it even began gives the FCC cover to approve the pay-TV mega-deals.

Guggenheim Securities analyst Paul Gallant said in a note to investors that the scuttled wireless deal is a "mild plus" for the four engaged pay-TV operators, giving the FCC "some new political breathing room."

"The commission can take a victory lap for having been the cop on the beat in blocking at least one megadeal out of an unprecedented, and unpopular, media/telecom consolidation wave," added Craig Moffett, principal analyst at MoffettNathanson.

Meanwhile, Bernstein Research analyst Paul de Sa noted that the FCC has shown it "can still be a relevant institution, able to resist high-profile lobbying campaigns and ignore distractions such as auction promises and attempts to negotiate by press leak."

On Wednesday, the Wall Street Journal reported that Sprint ended talks aimed at combining the No. 3 and No. 4 wireless services in the U.S. because it kept getting repeated warnings from regulators that they were too concerned about market consolidation to let the deal go forward.

The report also said that Sprint CEO Dan Hesse would be replaced by billionaire Marcelo Claure, head of mobile phone distributor Brightstar.

For the involved pay-TV operators, the scuttling of a big wireless merger came simultaneously with 21st Century Fox's decision to end its quest to acquire Time Warner, Inc. This might remove an extra layer of media consolidation pressure from the respective regulatory processes.

For more:
- read this FierceWireless story
- read this Wall Street Journal story
- read this Bloomberg story

Related links:
Report: France's Iliad talking to Dish, Cox, Charter to help sweeten T-Mobile bid
Analysis: Iliad's $15B bid for control of T-Mobile puts pressure on SoftBank, Sprint to make deal
Report: SoftBank, DT reach 'basic agreement' on Sprint/T-Mobile merger

WHITEPAPER

How To Lower the Cost of Ownership of Your Cable Access Network

This white paper presents a cost analysis of a virtualized cable modem termination system (CMTS) deployed in a distributed access architecture (DAA). Learn how to eliminate traditional CMTS constraints, efficiently enhance your network performance and more.

Suggested Articles

WarnerMedia scored a key HBO Max distribution deal with Comcast just as it launched in May. Nearly six months later, there still isn’t an app.

Comcast is planning new data caps and video service price increases for its subscribers in 2021.

The Apple TV remote is an often reviled peripheral device. Universal Electronics has taken it upon itself to create a different option.