President-elect Donald Trump may not like the idea of AT&T and Time Warner merging, but there may be little he can do to stop it, according to analysts.
AT&T’s $85 billion deal for Time Warner is likely to go through, although it may come with concessions, including a possible spin-off of major Time Warner brands, Wells Fargo analyst Jennifer Fritzsche said in a research note.
“While we expect there likely will be concessions (possibly a CNN spin-off, and continued infrastructure investment by T), from a legal standpoint, we note that if denied this deal would be precedent setting given the fact that no vertical merger in the TMT space has been denied,” wrote Fritzsche, adding that, while many mergers cut jobs, the small amount of overlap in core business and expertise for AT&T and Time Warner likely means no major headcount reductions.
BTIG analyst Rich Greenfield shared the view that it’s unlikely the merger could be halted. He told the New York Post that it would be a “novel interpretation of the law” should the deal be blocked.
Last week, AT&T indicated in an SEC filing that it didn’t anticipate Time Warner would have to transfer any FCC licenses following the merger, a development that suggests the merger can skirt an FCC review. That would leave only the Justice Department review standing in the way and, according to Fritzsche, the DoJ’s chances of blocking the deal in court would be slim to none.
“Our contacts tell us that this deal presents nothing out of the ordinary compared to other vertical mergers that DOJ has approved for years,” she said, though she cautioned that that the incoming White House could still “try to assert leverage over the conditions or terms of approval through indirect channels.”
Discussion of Trump’s possible objection to the deal renewed this week after the President-elect got into a shouting match with Time Warner-owned CNN at a press conference, later tweeting that CNN is “fake news” and on track to lose its credibility. Trump’s animosity toward CNN is rumored to be the root of his objection to the merger.
AT&T CEO Randall Stephenson met with Trump at Trump Tower Thursday, a day after the press conference dust-up, further fanning speculation that AT&T was in damage control mode. But AT&T stated yesterday that the merger did not come up during the meeting, and that Trump and Stephenson instead discussed how AT&T can help grow the U.S. economy and job market.