Carr's DEI Objections Could Sink Other Transactions: Levin
New Street’s Blair Levin warned Monday that the FCC may block transactions beyond Verizon's proposed buy of Frontier based on whether the companies get rid of diversity, equity and inclusion policies (see 2503210049). Levin specifically mentioned T-Mobile’s proposed purchase of wireless assets from UScellular (see 2405280047) and other deals.
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“Immediately after the election, investors were excited about the prospect of easier government approvals of transactions,” but “as we have previously discussed, that is not the way the review process is working out,” Levin wrote to investors. FCC Chairman Brendan Carr “does not need an FCC majority or an articulated rationale to block any deal he wants.”
Carr, “citing the precedent of Chair Jessica Rosenworcel’s process for handling the Tegna transaction, will argue that the Chair has the authority sufficient to delay a decision for a long period of time and then have the relevant bureau send the matter to an Administrative Law Judge (ALJ) with an order raising lots of questions for the ALJ to address,” Levin said: “Every deal that has been sent to the ALJ for further adjudication has resulted in the parties abandoning the deal, as deals cannot be in transaction review purgatory for as long as the ALJ process will take.” Courts won’t block sending a transaction to an ALJ for review “on the grounds that such actions are not final FCC decisions and therefore are not reviewable by a court.”
Levin noted that Carr hasn’t fully articulated what he means by DEI. “We think he is applying to DEI the old Supreme Court standard on pornography; that he knows it when he sees it,” Levin said. In the accusations against Verizon, Carr didn’t “point to actual employment actions by Verizon … he simply pointed to a website.”