Solution Providers See AT&T-Time Warner Merger More Likely To Win Trump Administration's Approval If It Creates Jobs

AT&T's proposed $85.4 billion acquisition of media and entertainment powerhouse Time Warner, a merger that President Donald Trump said he opposed during his campaign, is on the line. But AT&T, as well as solution providers, think that Trump could shift his stance to support the deal under the right circumstances.

Many solution providers believe that 2017 will see the eventual approval of the AT&T-Time Warner deal, but not without some concessions from Dallas-based AT&T and additional scrutiny from Trump, who was sworn in as the 45th president of the United States Friday.

"AT&T will have to give Trump something in order to get the deal to go through because he'll need to save face, too," said one AT&T partner that requested anonymity.

[Related: Partners: Trump Could 'Relax' Net Neutrality And Threaten Telecom Consolidation]

For starters, Trump will have to be convinced that the deal won't kill competition for consumers, said the partner.

To secure his blessing, Trump will also most likely require that AT&T commits to creating new U.S.-based jobs that result from the merger, rather than the usual job cuts that often accompany such deals, said the partner.

"When you have a merger of this magnitude, there's going to be tons of redundant positions," the partner said. "AT&T will have to counter that by proving things like outsourced jobs will be coming back to the U.S."

Michael Bremmer, CEO of Moreno Valley, Calif.-based telecom consultancy TelecomQuotes.com, said that getting a major U.S.-based corporation to put money back into the U.S. via job creation or infrastructure will go a long way to helping Trump seek re-election.

"Trump wants eight years in the White House, and the only way he'll do that is if, in four years, people feel richer and the economy is moving," Bremmer said.

For his part, the President acknowledged in an interview with news site Axios Tuesday that he had gone on record in the past saying that the merger was "too much concentration of power in the hands of too few."

"We have to keep competition ... I haven't seen any of the facts, yet. I'm sure that will be presented to me and to the people within government," Trump said of the pending AT&T-Time Warner deal.

The new administration will have a fair amount of power in determining the fate of a merger. Should Trump still pursue his campaign promise to squash the deal, the executive branch could choose to interpret content creation as a telecommunications function, which would cast the AT&T-Time Warner merger as an unacceptable concentration of power within the telecom industry, according to Mike Jude, research manager for analyst firm Frost and Sullivan.

"Trump might say that it's too much of a concentration of power in one industry, but it's really not. AT&T is a telco and primarily in the business of wireless, and Time Warner is about content – which has been separate from telecom – so what it really does in terms of promoting [AT&T's] core business is not really clear," he said.

Comcast, for example, hasn't been able to leverage its NBCUniversal purchase within its core business, Jude added.

But Jude agrees with solution providers that the final decision will come down to a case made for the economy and whether Trump can be assured that the deal will result in new jobs.

"I think that the [incoming] FCC [staff] is going to be looking at not only the concentration of power in the telecom industry, but also the impact on the economy, which is something that the FCC hasn't historically paid a lot of attention to," he said.

AT&T Randall Stephenson, flanked by Robert Quinn, AT&T’s senior executive vice president for external and legislative affairs, last week visited Trump Tower in New York City Thursday for an hour-long meeting, the Trump camp and AT&T both confirmed. AT&T denied discussing the pending merger with Trump during the meeting.

Instead, AT&T spokesman Michael Balmoris during a press conference said that the meeting focused on how AT&T, "as the country's leading investor of capital for each of the last five years, can work with the Trump administration to increase investment in the U.S., stimulate job creation in America, and make American companies more competitive globally."

Transition spokesman Sean Spicer for the Trump administration declined to confirm whether the merger had been discussed.

"I think you've seen by the meetings that [Trump] had with other CEOs, his primary focus is how companies can continue to create jobs, lift up wages and the policies and regulations that are standing in the way of creating further jobs for Americans, creating higher-paid jobs and also creating economic growth, and them doing additional business in other countries, market access and things like that," Spicer said during the press conference.

Some industry pundits believe that the President's cabinet selections and transition team members, many of whom have historically favored industry consolidation, may be favorable to the AT&T-Time Warner combination.

Tom Wheeler, current Chairman of the Federal Communications Commission (FCC) appointed by President Barack Obama is stepping down this month, and reports have suggested that Trump will likely appoint Jeffrey Eisenach, who is currently overseeing the FCC's transition, to fill Wheeler's spot.

Some of Trump's newly appointed candidates – including Eisenach – have favored business environments where government regulation was minimal, and the marketplace determined a deal's success or failure, according to partners.

Eisenach, for example, sided with the large, incumbent carriers in publicly opposing net neutrality, a set of regulations that stipulate equal access to online content, of all types, regardless of the owner or creator. The current rules also reclassified wireless or fixed-line broadband providers as "common carriers," which gives the FCC permission to regulate them as it regulates traditional telephone service providers.

In December, AT&T's Stephenson publicly expressed his hope that the new administration’s approach to FCC regulations would be more in favor of mergers than President Obama's FCC.

’We’re hopeful that perhaps maybe a more moderate approach to some of these regulations is in the making under a Trump administration,’ Stephenson said.

At the World Economic Forum in Davos Tuesday, Stephenson said that he was "taken by [Trump's] inquisitiveness on AT&T, what tax reform would mean to a company like AT&T, [and] what would it mean [for] capital investment levels" during their meeting.

Stephenson Tuesday also said that carrier is still confident it will receive approval for the planned acquisition.

"This is a classic vertical merger," Stephenson said. "The competitive environment in telecom and the competitive environment in media/entertainment the day after the deal closes will look the same. And there are decades of precedent on these kinds of deals."

AT&T and Time Warner filed a document with the Securities and Exchange Commission earlier this month that said the two companies don't plan on transferring Time Warner's FCC's licenses to AT&T once the deal closes. The move was thought to be an attempt to skirt am FCC review of the merger, but Frost and Sullivan's Jude said that the deal won't be able to bypass the FCC.

"There's no question about it," Jude said. "AT&T is a common carrier, and that means that virtually everything they do comes under regulatory scrutiny."

Stephenson said on Tuesday that the Justice Department, right on schedule, has already begun reviewing the deal.