As AT&T Inc. (NYSE: T) and Time Warner Inc. (NYSE: TWX) seek government approval for their $85 billion megadeal, some of their most important negotiations may take place in private conversations with rival executives instead of in the nation’s capital.

The merger offers competitors and partners a rare opportunity to cut more favorable deals with both companies in exchange for their public endorsement, which can be valuable in getting regulators to sign off. Meanwhile, other pay-TV providers and programmers will lobby to block the deal or place limits on an empire that would own many of the movies and shows it delivers to wireless, internet and video subscribers.

“The part you never see is what the various players demand behind the scenes in order to support the deal in Washington,” said Craig Moffett, an analyst at MoffettNathanson LLC. “You’ll have all kinds of programmers essentially demanding a pound of flesh. It’s a gravy train for everybody.”

A hint of that back-channel dealing popped up two years ago. Discovery Communications Inc. (Nasdaq: DISCA), owner of TLC and Animal Planet, argued against Comcast Corp.’s (Nasdaq: CMCSA) purchase of Time Warner Cable Inc., saying it would use its bigger size to hurt TV networks. In response, Comcast claimed that Discovery had demanded “unwarranted business concessions,” like higher carriage fees and greater distribution of its channels, in exchange for not opposing the merger. Discovery denied Comcast’s claim at the time. Both companies declined to comment on that old dispute.

The biggest question is whether Netflix Inc. backs the deal, Moffett said. The streaming-video giant opposed Comcast’s bid to buy Time Warner Cable, and the deal was blocked. Time Warner Cable was later purchased by Charter Communications Inc., with Netflix’s (Nasdaq: NFLX) blessing.

Regulators have made protecting the online video market one of their top priorities. They’ve used their oversight over big mergers to win commitments from large internet providers to treat content equally on their networks -- including competing video services.

“Netflix, for better or worse, will end up speaking on behalf of an entire class of would-be competitors,” Moffett said. “That gives them tremendous negotiating leverage for their support of the deal.”

So far, Netflix has been conditionally in favor of AT&T’s bid for Time Warner.

“We want to make sure it doesn’t give an unfair advantage to HBO,” Netflix CEO Reed Hastings said at a conference last month. “If it’s open competition, we love that.”

As consumers continue to migrate towards the Internet and mobile technology for their viewing experiences, the demand for video streamers --  such as Netflix and Hulu -- has been rising. For example: Twitter agreed to buy Magic Pony Technology to improve the social network's video quality as the company announced plans to begin livestreaming at least 10 National Football League games.

Programmers have already asked for assurances about video streamed online, since AT&T is one of the biggest providers of wireless and residential internet service and Time Warner owns widely viewed cable networks like HBO and TNT. 

AT&T lets subscribers to its DirecTV satellite service watch video on mobile devices without counting against their wireless data use, a practice known in the industry as “zero-rating.” The carrier plans to introduce a $35-a-month web TV service in the coming weeks that would work similarly. Other media companies will probably demand that their online services, like CBS Corp.’s (NYSE: CBS) All Access, are zero-rated too.

“The idea that DirecTV could avoid usage caps while Netflix would run up data charges for customers is never going to fly,” Moffett said.

Some big media companies have already expressed their concerns about the AT&T deal. “A transaction of this magnitude obviously warrants very close regulatory scrutiny,” Walt Disney Co. (NYSE: DIS) said shortly after the acquisition was announced.

Other programmers have been silent. They may be waiting to see what regulators require of the two companies, or what AT&T and Time Warner offer on their own. Some will stay mum or back the deal rather than jeopardize their relationships.

Others will bide their time until after the presidential election on Tuesday, since a new administration and members of Congress could render any lobbying now useless. Republican candidate Donald Trump has explicitly opposed the merger, while Democrat Hillary Clinton has said it should be studied carefully.

“In a deal that could take 15 months, you are not going to complain to people who may not be there,” said BTIG analyst Rich Greenfield.

Many channel owners will also want access to valuable data that Time Warner would get from AT&T subscribers, said Brian Wieser, an analyst with Pivotal Research. TV programmers have tried for years to offer the kind of targeted advertising that Google Inc. and Facebook Inc. deliver, but lacked the viewer data that pay-TV providers like AT&T and Comcast own.

And dozens of smaller programmers, especially minority-owned channels, are likely to use the merger review as an opportunity to get their networks carried on AT&T’s DirecTV. To win approval to buy NBCUniversal in 2011, Comcast Corp. agreed to carry such networks, leading to the inclusion in its lineup of Aspire, a channel launched by Magic Johnson, and Revolt, a music-focused channel owned by Sean “Diddy” Combs.

AT&T CEO Randall Stephenson said he expects regulators will place conditions on the deal. He told Reuters last week that he’s open to sharing subscriber data with other programmers.

"We anticipate that the regulators may have some issues that they want to deal with on this,” Stephenson said on Oct. 24 when the deal was announced. “We’re convinced that these type of issues can be handled with conditions."

Much depends on whether the Federal Communications Commission will have a say on the merger. While the Justice Department will decide whether the deal gives AT&T too much market power and reduces competition, it’s unclear whether the commission, whose job is to ensure mergers are good for the public, will have jurisdiction. Time Warner owns airwave licenses that it would need to sell off to avoid the FCC deciding on the deal.

AT&T may want to avoid the FCC, in part because the agency often requires companies to make numerous promises before giving its blessing. Comcast, for example, agreed to about 150 conditions before it got FCC approval to buy NBCUniversal. They ranged from airing public service announcements about obesity to offering low-income internet service.

With the FCC able to exact such pressure, it may behoove companies to wait to see whether the agency will indeed review the deal.

"It’s way too early for us to judge on anything." CBS CEO Leslie Moonves said of the deal during a call with analysts Thursday. "We’re sort of staying out of the fray for the moment until we’ve had a chance to look at it further."

Additional reporting by Kamaron Leach, Mergers & Acquisitions

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