Wall Street Journal

Windstream Holdings, Inc. and EarthLink Holdings Corp. agreed to a $673 million all-stock merger, combining the network service providers as they look to trim costs amid declining revenue.

Windstream—which provides cloud computing, broadband and voice services—said it expects to issue roughly 93 million shares to complete the deal. EarthLink also provides cloud networking as well as other network services. The companies said the deal is valued at about $1.1 billion including debt. Upon closing of the transaction, expected in the first half of 2017, Windstream shareholders will own 51% of the combined company and EarthLink shareholders will own 49%. The companies believe the increased scale of a combined company—which will keep the Windstream name—will give it the leverage to compete while cutting more than $125 million in annual operating and capital expenses through synergies.

CenturyLink said it plans to sell its data centers and colocation business to a consortium led by BC Partners for $2.3 billion, which it will use in part to fund its planned tie-up with Level 3 Communications. Under the terms of the agreement announced, CenturyLink has agreed to sell the data centers and colocation business for $2.15 billion in cash. It will also receive a $150 million minority stake in the consortium’s new global secure infrastructure company.

CenturyLink recently reached a $25 billion cash-and-stock deal to buy Level 3. The deal would turn CenturyLink—which has grown from a small Louisiana phone provider by scooping up the former Qwest and Sprint’s landlines—into an even more corporate-focused service provider. The combined company would also keep millions of home Internet subscribers, most of whom use slower digital subscriber lines.

AT&T’s practice of exempting its streaming video services from data-usage caps is rankling competitors and shaping up as a major issue for regulators set to weigh the company’s proposed acquisition of Time Warner.

When AT&T rolls out its $35-a-month DirecTV Now online TV service, its wireless subscribers will be able to stream as much as they want without it counting toward their monthly data caps. But if the same customers binge on outside services like Netflix or Hulu, those bits will add up—potentially leading to surcharges. Streaming services are likely to press regulators to scrutinize the practice—known as “zero rating”—in their review of the AT&T-Time Warner deal, people familiar with the matter said. TV networks that have streaming apps, like CBS and ESPN, also may have a stake in the matter. Several companies are likely to argue that AT&T’s DirecTV Now approach is anticompetitive, and will push for conditions on the merger, the people say.

Some Federal Communications Commission staffers already view AT&T’s DirecTV Now exemption as an example of improper zero-rating, people familiar with the situation said, because it disadvantages AT&T’s streaming rivals. The agency is considering how to address zero-rating and whether to raise it as a merger issue, the people said. Other options the agency is weighing include industrywide guidelines on zero-rating.

The disability lawsuits started hitting the Pittsburgh federal courthouse in July, all claiming corporations’ websites violated the law by not being accessible to the blind. The first round came against household names such as Foot Locker, Toys “R” Us, Brooks Brothers Group, and the National Basketball Association. Later suits targeted lesser-known retailers including Family Video Movie Club and Rue21.

All told, about 40 nearly identical cases have landed in front of the same federal judge, Arthur Schwab, all brought by one local law firm, Carlson Lynch Sweet Kilpela & Carpenter LLP. Nationwide, more than 240 businesses have been sued in federal court since the start of 2015, concerning allegedly inaccessible websites, according to law firm Seyfarth Shaw LLP. Most settle quickly, for between $10,000 and $75,000, lawyers involved say, with the money typically going toward plaintiffs’ attorneys’ fees and expenses.

Qualcomm agreed to buy NXP Semiconductors NV for $39 billion, adding the top supplier of automotive chips to the San Diego (CA) company best known for designing smartphone chips. The agreement represents the biggest semiconductor deal ever, eclipsing Avago Technologies Ltd.’s pact to buy rival Broadcom Corp. for $37 billion, and behind only Dell Inc.’s $60 billion acquisition of EMC Corp. among pure tech deals. The deal values NXP at $110 a share, which represents a 34% premium over where NXP shares traded before The Wall Street Journal reported on the talks Sept. 29. Including debt, the deal is worth $47 billion.

NXP’s position in the fast-growing automotive-chip market was seen as a motivation for the deal because analysts say Qualcomm wants to supply its chips for self-driving cars. The combined company is expected to have annual revenue of more than $30 billion. The deal will reshape Qualcomm, pushing the company deeper into the process of making chips and expanding its product line beyond mobile devices. While Qualcomm derives most of its revenue from designing and selling chips, the company earns more than half of its profits from licensing its wireless patents to nearly all makers of mobile phones. NXP, which became a bigger manufacturer through the purchase in 2015 of Freescale Semiconductor, owns seven factories in five countries that turn silicon wafers into chips. Besides those plants, known as fabs, NXP operates seven facilities that package and test chips before they are sold.

[Commentary] The future of the internet could be at stake at a conference in Tunisia, where diplomats from more than 100 countries will debate United Nations jurisdiction over the web.

What emerges from the World Telecommunication Standardization Assembly will affect geopolitics and global economic growth, and possibly internet freedom for billions of users. Diplomats will discuss the emerging Internet of Things, which will soon connect tens of billions of devices and people to the global network. A new navigational and addressing technology, Digital Object Architecture (DOA), could enable the real-time surveillance and tracking of each device and individual connected to the web. Some governments are advocating that DOA be the singular and mandatory addressing system for the Internet of Things. They also want this system to be centrally controlled by the UN’s International Telecommunication Union, which has contractual rights to the underlying intellectual property. China is working to join the leadership of the global study group on DOA and the Internet of Things.

America must quickly move beyond the divisive argument about ICANN and regain its internet-policy footing. Many more consequential battles over internet freedom loom—conflicts that will shape the digital future. It is time for the US to unify again behind a bipartisan vision and common strategy to safeguard internet freedom for tomorrow.

[McDowell, a former commissioner of the Federal Communications Commission, is a senior fellow at the Hudson Institute. Goldstein is an adjunct senior fellow at the Council on Foreign Relations.]

AT&T’s deal to buy Time Warner sails toward two cresting waves of opposition: resurgent antitrust enforcement in Washington and politicians fired by a new bipartisan populist rage.

It is too early to know how regulators will treat the AT&T-Time Warner deal. But after several quiet years, President Barack Obama’s antitrust team has switched into high gear in response to a recent spurt of deal-making. This trend is likely to continue in the next administration, as both presidential campaigns have signaled unease with the AT&T deal and with economic consolidation more broadly. Justice Department antitrust enforcers say they have sunk eight would-be deals over the past year and are currently waging court fights over three more, including two big health-insurance mergers. In all, the Justice Department has stopped 43 deals over the past eight years, more than double the mergers blocked by the preceding Bush Justice Department.

AT&T executives say their proposed $85.4 billion acquisition of Time Warner would deliver innovation to advertising.

While ad industry executives love hearing such talk, they say it is unclear exactly what it could mean for them. The combination of AT&T and Time Warner would bring together huge amounts of viewer data with content, which could serve as a catalyst to make TV advertising a lot more targeted to individuals, similar to the way digital advertising is now. In addition, AT&T’s data from its 90 million wireless subscribers and DirecTV households could be leveraged to target people with ads across devices, including TVs, laptops and mobile phones, some ad executives speculate.

AT&T is buying Time Warner to help it succeed in the future world of media consumption. In many ways, it already is living in that world, and it isn’t doing all that well. That alone is an important warning sign of the risk the telecom company is taking.

AT&T’s deal to buy Time Warner for $85.4 billion in cash and stock marks the wireless carrier’s second major bet in as many years on beefing up its exposure to the pay-TV ecosystem. With DirecTV, AT&T became the country’s largest pay-TV distributor. With Time Warner, it would become the owner of some of TV’s most popular networks and programming. Both target companies achieved their dominance in the world of traditional pay TV. AT&T, which is preparing to launch an Internet TV service, hopes to use those assets to be ready for a world where people predominantly watch video online and on their mobile devices. Still, there is no guarantee that future will be as lucrative as pay TV’s past, and that could erode the value of AT&T’s purchases. If that future is anything like the present for AT&T, it will be hard for the company to justify the price of the deal. AT&T has lost 200,000 video customers in the past year, despite the purchase of DirecTV last July. That could be a sign of things to come for Time Warner, as it tries to grow sales of its content to pay-TV providers. AT&T’s strategy is also far bolder than that of rival Verizon. The latter has chosen to tackle the wireless problem by pursuing a lower-risk strategy of growth through short-form video, funded by Internet advertising. That means a failure for Verizon would be less costly. To justify its purchase of Time Warner to investors, AT&T needs a Hollywood ending.

AT&T and Time Warner are suiting up for the Great Media Game. Their strategy to win is more about defense than offense. The strongest case for the gargantuan merger is that it is a hedge against a future where the first point of entry for a media consumer might be Netflix, Facebook, YouTube or Hulu, just as easily as a cable or telecom company. AT&T’s $50 billion acquisition of DirecTV tethered the telecom giant to a pay-TV business that has begun to decline and could be in store for serious pain if cord-cutting accelerates.

The good news for AT&T, Comcast, and others is that consumers will still need broadband subscriptions to sign up for their favorite streaming services. Now, with the Time Warner deal, there will be another hedge for AT&T: Any emerging streaming platform will need to license content from the big media conglomerates to survive. Time Warner won’t likely be left out of any aspiring “skinny” online TV bundle from Google, Amazon or Apple, or TV-like platform on social media, be it via Facebook, Snapchat or Twitter. (A side benefit: AT&T will take on Time Warner’s 10% ownership of Hulu alongside Comcast, Walt Disney and 21st Century Fox)