Merger mania continues with Disney and Fox

With help from John Hendel, Steven Overly and Margaret Harding McGill

SIREN: MERGER MANIA CONTINUES WITH DISNEY AND FOX: Disney this morning made it official that it intends to purchase a broad swath of film and television businesses from 21st Century Fox in an acquisition valued at $52.4 billion in stock. The deal is subject to regulatory approval. And DOJ is already challenging the AT&T-Time Warner media merger, meaning all eyes will be on what the administration does with Disney and Fox. Disney, which already owns ESPN and ABC, will expand its portfolio to include movies like X-Men, television networks like Fox Sports Regional Networks plus a controlling interest in streaming service Hulu. Steven has more for Pros.

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DRIVING THE DAY: FCC VOTE ON NET NEUTRALITY — It’s finally here. The FCC is poised to repeal its Obama-era net neutrality rules today, “a step critics warn will upend the internet by allowing cable companies to control where their customers can go online,” Margaret reports. “The vote will cap months of debate pitting internet service providers and Republicans against tech companies and Democrats — along with a controversy over millions of fake public comments that flooded the FCC's website.”

— What it will do: “The FCC's order, from Republican Chairman Ajit Pai, will eliminate rules that require companies like Comcast and AT&T to treat all web traffic equally as it passes through their networks. In its place, the agency says internet providers will be allowed to block or slow some web traffic or negotiate paid deals with websites for so-called fast lanes to consumers — in exchange for disclosing those practices to the public. Another agency, the Federal Trade Commission, will have the power to act if those practices are deemed anti-competitive or harmful to consumers, the FCC’s Republicans say.”

— Tech talk: The Internet Association issued a preliminary rebuke of the vote early this morning, saying that relying on internet service providers to keep their promises is harmful to consumers. But the group, whose members include Amazon, Netflix, Facebook and Google, also said in a statement that “the fight isn’t over.” “Internet Association is currently weighing our legal options in a lawsuit against today’s order, and remains open to Congress enshrining strong, enforceable net neutrality protections into law,” President and CEO Michael Beckerman said.

— Litigation, then legislation? Rep. Ro Khanna (D-Calif.), whose district includes part of Silicon Valley, called a potential repeal the “equivalent of withdrawing from the Paris accords,” in an interview with MT. He also noted that he foresees the preservation of the rules ultimately being backed by the courts and potential legislation emerging after the dust has settled on litigation. Khanna added that he’s been in touch with Google and Facebook about advocacy on this issue and pushed back on the idea that larger tech companies have put it on the back burner. “They’re very, very strong on this … they philosophically believe in the freedom of the internet,” he said. He slammed Pai’s arguments about the rules’ impact on broadband investment as “disingenuous.”

— GOP backing: Republican lawmakers overwhelmingly shared their support for Pai’s efforts. House Energy & Commerce Committee members including Chairman Greg Walden (R-Ore.) and telecom subcommittee Chairman Marsha Blackburn (R-Tenn.) sent a letter cheering the impact this decision could have on broadband access: “This proposal is a major step forward in the effort to clear the way for the substantial investment necessary to advance our Internet architecture for the next generation and close the digital divide.” Senate Majority Leader Mitch McConnell also heralded the “light-regulatory touch” of Pai’s approach.

— CTO wrinkle: As Margaret reported, FCC CTO Eric Burger, who Pai appointed in October, has his own questions about Pai’s repeal. In an internal email on Wednesday to all five FCC commissioner offices, Burger said the main issue with the repeal is a concern that ISPs will block or throttle specific websites, though he said later in the day his concerns were fully addressed. INCOMPAS, a trade group representing smaller telecom firms, jumped on the report, calling it a “potential bombshell for the court to review.” Burger also noted: “The discussion is a normal part of the process with meeting items. After I reviewed the relevant sections, I am satisfied the order addressed my question and we also added clarifying language to make the issue clear. I fully support the item.”

— Watch out for protests: The Voices of Internet Freedom, a coalition of activists, has plans to rally outside the FCC. Lawmakers including Sen. Ed Markey (D-Mass,) along with Reps. Keith Ellison (D-Minn.), Maxine Waters (D-Calif.) and Khanna are expected to make an appearance. We’re tracking.

IANCU VOTE ON DECK — The Senate Judiciary Committee is set to consider the nomination of Andrei Iancu for USPTO director. Iancu, who worked as a managing partner at Los Angeles-based law firm Irell & Manella, has touted his experience dealing with cases for both the tech and pharma sectors — two industries often at odds with one another on patent battles.

GOOD THURSDAY MORNING and welcome to Morning Tech, where we need some help brainstorming the best White Elephant gifts. Send your tech and telecom tips to lzhou@politico.com and @liszhou. Catch the rest of the team’s contact info after Quick Downloads.

Got an event for MT’s tech calendar? Email us the details at techcalendar@politicopro.com.

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TECH GROUPS LIKE I.T. MODERNIZATION REPORT — Tech trade groups Internet Association and ITI praised a White House report released Wednesday that, as Steven reported, calls on federal agencies to beef up the security and efficiency of their most critical information technology systems over the next year. “Today’s updated report affirms the need to adopt innovative, commercial cloud services, which provide better, more cost-effective, and more secure solutions,” Brian Larkin, IA’s director of cloud policy, said in a statement. The group’s members include cloud computing providers like Microsoft and Amazon. ITI’s Trey Hodgkins, the senior vice president for the public sector, called the Trump administration’s modernization efforts “essential” to improving the security and efficiency of online government services. “The completion of this report is a step in the right direction to begin an overhaul of the archaic IT that costs taxpayers $60 million a year to maintain,” he said in a statement.

TAX REFORM MAKES INROADS — Congress is steadily progressing on its tax reform package, with Republicans reaching a deal on the legislation on Wednesday, Pro Tax’s Brian Faler reports. Tech is keeping a close eye on the issue, given the massive gains companies could see from a reduced corporate tax rate, as well as a one-time reduced rate for bringing repatriated profits back home.

SILICON VALLEY MUST-READS —

— DOJ involved in review of Uber self-driving case: “A recent letter from the U.S. Attorney's office confirms the Justice Department has opened a criminal investigation connected to allegations that a former Uber executive stole self-driving car technology from a Google spin-off to help the ride-hailing service build robotic vehicles,” The AP reports.

— Russia didn’t spend much on Brexit social: “Facebook said Russian-backed groups spent less than £1 on advertising linked to Britain’s referendum last year to leave the European Union, according to a letter sent to the country’s Electoral Commission,” POLITICO Europe’s Mark Scott reports. … “Twitter has disclosed that Russian-backed accounts spent $1,031.99 to buy six Brexit-related ads on its platform during last year’s European Union referendum vote,” TechCrunch reports.

SPOTTED at the TechNet holiday party Wednesday night at Fig & Olive: Sen. Maria Cantwell (D-Wash.); Sen. James Risch (R-Idaho); Rep. Leonard Lance (R-N.J.); Rep. Suzan DelBene (D-Wash.); Rep. Jerry McNerney (D-Calif.); Rep. Suzanne Bonamici (D-Ore); Jeff Dobrozsi of Apple; Ian Rayder of Cisco; Steve Hartell and Mike Ward of Amazon; Josh Pitcock and Jason Mahler of Oracle; Israel Hernandez from the Department of Commerce; Carol Danko of the Overseas Private Investment Corporation; Yebbie Watkins, chief of staff to Rep. James Clyburn (D-S.C.); Beth Jafari, chief of staff to Senate Majority Whip John Cornyn (R-Texas); Sarah Fischer of Axios; Jack Smith of POLITICO; Tiffany Watkins of the Consumer Technology Association; Craig Albright of BSA; Heather Podesta of Invariant; and Linda Moore, Alex Burgos, Sue Hothem, Gideon Lett, and Dave Toomey of TechNet.

TRANSITIONS — Radha Sekar’s appointment as CEO of the FCC’s Universal Service Administrative Co. (USAC), has been approved by Pai.

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AT&T resolves worker dispute: “AT&T Inc. reached a tentative deal with the union representing more than 21,000 of its wireless-support and retail workers, ending a 10-month standoff over pay and work conditions,” The Wall Street Journal reports.

Speaking of AT&T: “[The company] has started trials in Georgia state and a non-U.S. location to deliver high-speed internet over power lines,” Reuters reports.

Microsoft beefs up product AI: It’s updated Office and search products with more AI-driven tools, Engadget reports.

Tips, comments, suggestions? Send them along via email to our team: Eric Engleman (eengleman@politico.com, @ericengleman), Angela Greiling Keane (agreilingkeane@politico.com, @agreilingkeane), Nancy Scola (nscola@politico.com, @nancyscola), Margaret Harding McGill (mmcgill@politico.com, @margarethmcgill), Ashley Gold (agold@politico.com, @ashleyrgold), Steven Overly (soverly@politico.com, @stevenoverly), John Hendel (jhendel@politico.com, @JohnHendel) and Li Zhou (lzhou@politico.com, @liszhou)