AT&T/Time Warner condition likely that ‘content cannot be exclusive,’ analyst says

Time Warner
Most analysts expect AT&T to successfully consummate its merger with media giant Time Warner

As AT&T and Time Warner continue to push their proposed $85 billion merger, one analyst believes that a condition regulators will impose on the transaction will revolve around access to Time Warner’s vast content holdings.

“We believe one of the concessions will be the TWX content cannot be exclusive,” wrote Wells Fargo analyst Jennifer Fritzsche following a recent dinner meeting with AT&T executives. Further, Fritzsche wrote, that condition likely won’t impact AT&T’s objectives.

“T likely wants as many ‘eye balls’ on this content as may be seen,” she wrote. “Therefore, the argument it would be exclusive does not make sense, in our view. As T noted tonight, in their view, ‘content always wins.’”

Conditions focusing on Time Warner’s content could have implications for a variety of players. For example, Time Warner’s HBO remains largely only available on premium cable channels and the brand’s streaming service, HBO Now. Further, some older HBO content is still available on Amazon’s Prime Video service thanks to a 2014 agreement between HBO and the streaming vendor. It’s unclear whether any regulatory conditions on the AT&T and Time Warner merger would affect such agreements.

To be clear though, most analysts expect AT&T to successfully consummate its merger with media giant Time Warner. Already The European Commission has signed off on AT&T’s bid to acquire Time Warner.

But while the proposed $85 billion merger is likely to face an antitrust review by the Justice Department, there is still some question of whether AT&T and Time Warner will have to contend with the FCC’s public-interest review. The FCC’s new chairman, Ajit Pai, has told The Wall Street Journal that, since the companies put together the deal so that no FCC licenses need to be transferred, the FCC won’t be involved.

As for AT&T top management, they have continued to believe that the deal will ultimately close by the end of this year. “We remain confident that the deal will be approved later this year,” AT&T CFO John Stephens told investors last month.