FCC’s Carr Threatens to Block M&A for Companies With DEI

(Bloomberg) — The US Federal Communications Commission is prepared to block mergers and acquisition proposals from companies that promote “invidious” DEI policies, according to chairman Brendan Carr.

The move could threaten billions of dollars worth of deals in the communications sector, with Carr specifically mentioning Paramount Global’s merger with Skydance Media, Verizon Communications Inc.’s acquisition of Frontier Communications Parent Inc., and T-Mobile US Inc., which is seeking to purchase of US Cellular Corp.’s wireless operations and some of its spectrum assets.

“Any businesses that are looking for FCC approval, I would encourage them to get busy ending any sort of their invidious forms of DEI discrimination,” Carr said in an interview Friday.

President Donald Trump has been pushing to root out diversity, equity and inclusion policies from the federal government, corporate America and beyond, issuing executive orders banning the practice and asking agency heads to identify targets, including listed companies, to investigate for “illegal DEI” efforts.

Using merger reviews as a way to stop companies from pursuing DEI initiatives is a new tactic, and marks a complete turnaround from the previous administration, which considered the promotion of diversity in a positive light in such evaluations.

“We can only under the statute move forward and approve a transaction if we find that doing so serves the public interest,” Carr said. “If there’s businesses out there that are still promoting invidious forms of DEI discrimination, I really don’t see a path forward where the FCC could reach the conclusion that approving the transaction is going to be in the public interest.”

Separately, Carr announced what he called a “sweeping” investigation Friday into Chinese companies that have been subject to national security restrictions but are still doing business in the US on some level, including Huawei Technologies Co. and ZTE Corp. In a press release, Carr said the commission has sent letters of inquiry and at least one subpoena to the companies being investigated.

The new FCC chair made his intentions clear on pursuing DEI policies from the outset, last month warning Verizon that its efforts to encourage diversity run afoul of Trump administration policies. He also sent a letter to Comcast Corp., raising concerns about “invidious forms of DEI.”

In addition to considering a company’s hiring practices, Carr said the commission may evaluate other aspects of its business, including supplier diversity efforts and programming choices. “We do have a broader public interest authority, particularly when it comes to licensed broadcast stations,” Carr said. 

The commission is simultaneously weighing Paramount’s merger proposal and investigating a complaint of “news distortion” against the company’s CBS News division for airing two different versions of an interview last year with Democratic presidential candidate Kamala Harris.

Paramount last month said it was making changes to its DEI programs to reflect Trump’s executive order, and would no longer set numerical hiring goals based on race, ethnicity or gender, nor collect that data for job applicants.

Representatives for Paramount, Verizon and T-Mobile didn’t immediately respond to requests for comment.

AT&T Inc., another company regulated by the FCC, dropped some DEI programs last month. Carr said he’s looking at those changes as a start and hopes other companies will follow the wireless carrier’s example.

Carr said he and his team are taking advice from anti-DEI activist Robby Starbuck, who claims credit for diversity policy changes at more than 15 companies. The agency is hoping to tap into Starbuck’s network of company contacts to uncover evidence of superficial changes, Carr said.

“If companies are telling us at the FCC, ‘We’ve ended this particular discriminatory program,’ and then he’s got a whistleblower that says, ‘Actually, they kept it and they just moved it down the hall or changed the name’ — I do think that relationship with Starbuck and his network is going to prove helpful,” Carr said.

–With assistance from Fareed Sahloul and Rick Green.

(Updates with Carr comments, additional detail throughout)

More stories like this are available on bloomberg.com