FCC threatens blocking media mergers based on DEI policies
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The Federal Communications Commission is threatening to block media mergers based on corporate DEI policies.
Why it matters: This creates new layers of complexity and uncertainty for dealmakers, and reflects how the Trump administration is willing to pull novel levers to end what most CEOs viewed as sensible policies until two months ago.
Driving the news: FCC chair Brendan Carr tells Bloomberg that he only can "approve a transaction if we find that doing so serves the public interest ... If there's businesses out there that are still promoting invidious forms of DEI discrimination, I really don't see a path forward where the FCC could reach the conclusion that approving the transaction is going to be in the public interest."
- He also mentioned several pending transactions, including Paramount's merger with Skydance, Verizon's $20 billion deal for Frontier Communications, and U.S. Cellular's $4.4 billion wireless unit sale to T-Mobile US.
- The Federal Trade Commission declined to comment when asked by Axios if it plans to take a similar tact.
Zoom in: The FCC doesn't have antitrust regulation powers like the FTC or DOJ, but does need to approve broadcast license transfers and the ability to launch investigations that can drown deals via delay.
- In an interesting twist, however, the FCC also is legally required to "prevent digital discrimination of access to broadband services based on income level, race, ethnicity, color, religion, or national origin."
The bottom line: It's not clear that President Trump's executive order on DEI gives federal agencies the legal authority to block mergers on such grounds.
- But but all sorts of institutions — from universities to law firms — have been choosing protection over principle. No reason to think that dealmakers will act any different.
