AT&T’s plan to acquire Time Warner could face a rough ride from regulators. But, according to media reports, the proposed merger has a key fact in its favor: Time Warner holds only a single broadcast license—for an Atlanta TV station—which means the companies might avoid the FCC altogether altogether by divesting the TV station.
It turns out it’s not that simple. While Time Warner does indeed have only one broadcast license, it also has dozens of FCC licenses for satellites. And if AT&T (T) , or anyone else, wants to acquire those licenses, it must obtain permission from the FCC as part of a standard process for transferring spectrum-related assets.
“TW has dozens of satellite licenses. If AT&T acquires Time Warner and those licenses then there would be FCC review,” says John Bergmeyer, a lawyer with the research group Public Knowledge.
This contradicts reports by outlets like Reuters and the New York Times, which have suggested AT&T could duck FCC review altogether by divesting the Atlanta TV station.
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As FCC records show, the satellite licenses in question relate to dozens of so-called “Fixed Earth Stations,” which Time Warner (TWX) operates in various states, including New York, Ohio, and Georgia. A person familiar with the licenses, who did not want to be named, tells Fortune that Time Warner uses the satellites for its CNN operations and in distributing TV properties like HBO.
Unlike the Atlanta TV station, which is attached to a single broadcast license, it’s unclear if Time Warner could divest itself of the satellite licenses without disrupting its core programming and distribution operations.
AT&T told Bloomberg it is studying “which FCC licenses, if any, will be transferred” as part of the deal. An AT&T spokesperson did not immediately respond to Fortune about whether the satellite licenses are an integral part the merger.
In order to obtain the FCC’s permission to transfer licenses, the companies must show it is in the public interest to do so. While the agency routinely approves such transfers as matter of course, AT&T and Time Warner would likely face stiff opposition at a time of growing public concern over media consolation.
Critics have warned that, even though the deal represents a “vertical” rather than a “horizontal” merger (which receive more scrutiny), it poses a danger to competition because AT&T could distribute Time Warner shows in a faster or cheaper fashion to its own subscribers, or withhold them from rivals.
In the past, such as when Comcast (CMCSA) obtained NBC in 2010, companies have been able to overcome such objections by pledging to abide by certain conditions. But such pledges have not always been enough. Regulators shot down proposed mergers between AT&T and T-Mobile (TMUS) , and Comcast and Time Warner Cable, despite proposed conditions.
An FCC spokesperson declined to comment on the proposed AT&T and Time Warner merger.
Even if AT&T can avoid any FCC objections related to the satellite licenses, the phone giant would still face a stiff political and regulatory gauntlet before it could close the deal. This would include winning over the Justice Department, which has the power to file an antitrust lawsuit to block a merger, and mollifying the incoming President. (Both Hillary Clinton and Donald Trump have already complained about the deal.)
Meanwhile, AT&T will also have to sell the virtue of the merger to skeptical investors, who have so far reacted to the news by marking down the stocks of both companies, and to the business community. As Fortune editor Alan Murray wrote on Tuesday, after hearing CEOs from both companies defend the plan, “I’m still not convinced by the AT&T-Time Warner deal.”
