WASHINGTON (REUTERS) - AT&T Inc's proposed US$85 billion (S$118.45 billion) takeover of Time Warner Inc generated scepticism among both Democrats and Republicans on Sunday (Oct 23), making it more likely that regulators will closely scrutinise the effort to create a new telecommunications and media giant.
The biggest deal of the year, announced just over two weeks before the Nov 8 US election, is a gamble on a victory for Democratic presidential candidate Hillary Clinton and a continuation of the status quo on anti-trust and regulatory enforcement.
The Republican candidate Donald Trump, who is trailing Mrs Clinton in the polls, has said he would block the takeover.
The billionaire businessman has railed against the media's role in what he has described as a "rigged" election and he believes the acquisition of Time Warner, which owns CNN and Warner Bros, Hollywood's largest film and television studio, would concentrate too much power in one organisation.
"AT&T, the original and abusive 'Ma Bell' telephone monopoly, is now trying to buy Time Warner and thus the wildly anti-Trump CNN. Donald Trump would never approve such a deal because it concentrates too much power in the hands of the too and powerful few," Trump economic adviser Peter Navarro said in a statement on Sunday.
Mrs Clinton, who has expressed misgivings about other corporate megamergers, has not yet commented on the takeover.
But Senator Bernie Sanders, Mrs Clinton's former rival for the Democratic party's nomination, said on Twitter that the administration should "kill" the Time Warner takeover because it would mean higher prices and fewer choices for consumers.
Mr Sanders' comments carry weight because Mrs Clinton needs his coalition of young and left-leaning voters to propel her to the presidency.
Clinton spokesman Brian Fallon told reporters on Sunday there were "a number of questions and concerns" about the deal "but there's still a lot of information that needs to come out before any conclusions should be reached".
The Senate sub-committee on antitrust will hold a hearing on the acquisition sometime in November, said sub-committee chair Senator Mike Lee, a Republican, and the ranking Democrat, Senator Amy Klobuchar.
Mr Tim Kaine, Mrs Clinton's running mate and a senator from Virginia, said lawmakers and regulators would have to review the deal and "get to the bottom" of questions over whether the merger would decrease competition.
"Less concentration, I think, is generally helpful especially in the media," Mr Kaine said on NBC's Meet the Press.
The US Justice Department, not the president, has the power to reject such a deal if it violates antitrust laws. AT&T said it is unclear if the Federal Communications Commission will also have jurisdiction to review the deal.
A spokesman for the Justice Department declined to comment.
AT&T has described the deal as a "vertical merger" because there is no overlap between the two companies and hopes that such a tie-up will get the regulatory green light by the end of 2017.
"In the modern history of the media and the Internet, the US government has always approved vertical mergers like ours, because they benefit consumers, strengthen competition, and, in our case, encourage innovation and investment," Mr David McAtee, AT&T senior executive vice-president and general counsel, said in a statement on Sunday.
The Time Warner takeover mirrors the 2013 US$30 billion (S$41.8 billion) purchase of NBCUniversal by its rival Comcast, a deal which was cleared after regulators imposed concessions on the cable operator.
The cash and stock deal brings together two very different companies - one a telecoms company that traces its heritage back to Alexander Graham Bell, the other an entertainment company founded in the Hollywood of the 1920s.
But the tie-up, which is designed to boost the content AT&T can stream over its network, raises concerns that AT&T might try to limit distribution of Time Warner material.
Competitors such as NBCUniversal, Twenty-First Century Fox Inc and the Walt Disney Co could find that their content could be put at a disadvantage, some consumer advocacy groups suggested.
"A transaction of this magnitude obviously warrants very close regulatory scrutiny," said Disney chief communications officer Zenia Mucha.
NBC Universal, which is owned by Comcast Corp and Fox declined to comment on the merger.
Netflix chief content officer Ted Sarandos, speaking on Saturday at the Institute on Entertainment Law and Business conference at the University of Southern California, said he expected a close examination of the deal by regulators.
Senators Lee and Klobuchar said their sub-committee would "carefully review" the merger to make sure it does not harm consumers.
Lawmakers may pursue inquiries into the merger and build support for or against it, but it is ultimately up to the Justice Department to approve, block or place conditions on the deal.
Two of the biggest congressional critics of the mega-mergers among media companies and elsewhere in the US economy said late on Saturday that they would take a hard look at this deal.
Senator Richard Blumenthal, who is on the Senate Judiciary Committee, noted the proposed acquisition would combine a wireless company, a pay-TV provider and a studio.
"I will be looking closely at what this merger means for consumers and their pocketbooks and whether it stands up to the rigorous review standards set by the Department of Justice's antitrust division in the last few years," he said.
Senator Al Franken, who is also on the judiciary committee, said that the deal raised "immediate flags".
"I'm sceptical of huge media mergers because they can lead to higher costs, fewer choices, and even worse service for consumers," he said. "And regulators often agree, like when Comcast unsuccessfully tried to buy Time Warner Cable, a deal that I fiercely opposed."