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.
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