FCC Chairman warns of blocking mergers for companies with DEI issues

The US Federal Communications Commission, under the leadership of chairman Brendan Carr, is considering a significant shift in its approach to mergers and acquisitions in the communications sector. Carr has indicated that the FCC may block proposals from companies that engage in what he terms as “invidious” Diversity, Equity, and Inclusion (DEI) policies. This stance has the potential to impact several major deals, including Paramount Global’s merger with Skydance Media, Verizon Communications Inc.’s acquisition of Frontier Communications Parent Inc., and T-Mobile US Inc.’s efforts to purchase US Cellular Corp.’s wireless operations and spectrum assets.

Carr emphasized the importance of ending discriminatory DEI practices for companies seeking FCC approval. This shift comes in the wake of President Donald Trump’s initiatives to remove DEI policies from the federal government and corporations, labeling them as “illegal DEI” efforts. The move to leverage merger reviews as a tool to prevent companies from pursuing DEI goals contrasts with the previous administration’s support for diversity promotion in similar evaluations.

Carr highlighted the FCC’s statutory obligation to approve transactions beneficial to the public interest, a principle that may be at odds with companies engaging in discriminatory practices. The chairman’s proactive approach extends to launching a comprehensive investigation into Chinese companies like Huawei Technologies Co. and ZTE Corp., aimed at addressing national security concerns and their continued operations in the US.

In line with his focus on combating “invidious DEI” practices, Carr has previously raised concerns with companies like Verizon and Comcast regarding their diversity initiatives. The FCC’s scrutiny may extend beyond hiring practices to a broader evaluation of supplier diversity efforts and content choices. Paramount’s ongoing merger consideration coincides with an inquiry into a news distortion complaint against its CBS News division.

In response to the changing regulatory landscape, companies like Paramount, Verizon, and T-Mobile are reevaluating their DEI programs to align with executive orders and regulatory expectations. AT&T Inc., another FCC-regulated entity, made adjustments to its DEI initiatives, setting the tone for potential industry-wide shifts. Carr’s collaboration with anti-DEI activist Robby Starbuck underscores the FCC’s commitment to uncovering evidence of superficial diversity efforts and promoting meaningful change within the sector.

As Carr and his team navigate the evolving regulatory landscape, the FCC’s scrutiny of DEI practices promises to reshape the communications industry’s approach to diversity, equity, and inclusion. By scrutinizing mergers, acquisitions, and corporate practices through the lens of DEI policies, the FCC is poised to drive significant shifts in the sector’s approach to promoting diversity and inclusivity.