What happened to the AT&T/Time Warner deal yesterday, and what’s next

Today, in the aftermath of a contentious Wednesday for AT&T, Time Warner and the Justice Department, attentions have turned toward whether AT&T or the DOJ will win a legal battle over the merger.

The $85 billion AT&T/Time Warner deal as recently as early last week still looked like a lock for approval. But beginning with a Justice Department lawsuit report, the ground began shaking and on Wednesday, the bottom dropped out and now the deal looks anything but certain.

Here’s a quick recap of everything that happened to the AT&T/Time Warner deal on Wednesday as the DOJ review quickly became a major roadblock to the merger.

  • During an early morning Wednesday discussion at the Wells Fargo investor conference, AT&T CFO John Stephens declined to share many details about the merger—which is down to the U.S. antitrust OK on its list of approvals. But Stephens did change the narrative somewhat, altering AT&T continued assurances that the deal would close before year’s end to now account for uncertainty around the timeframe for finalizing the transaction.
  • Later that morning, reports surfaced suggesting the DOJ told AT&T that it must sell Turner Broadcasting and its valuable asset CNN in order to meet conditions for approval of the Time Warner merger.
  • Similar reports suggested that AT&T’s other option would be to sell off DirecTV, the satellite operator it had acquired for $49 billion only a few years earlier.
  • Still more reports, citing unnamed DOJ officials regarding the discussions between AT&T and the DOJ, suggested that it was AT&T CEO Randall Stephenson who offered to sell off CNN in order to win approval for the merger.
  • Stephenson issued a statement flatly denying ever offering that concession: “Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so.”

RELATED: AT&T casts doubts on timing for Time Warner deal closure as DOJ suit looms

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Today, in the aftermath of a contentious Wednesday for AT&T, Time Warner and the Justice Department, attentions have turned toward whether AT&T or the DOJ will win a legal battle over the merger.

“AT&T appears confident they can win vs. the DOJ in court and does not plan to offer any divestitures to the DOJ. With the high likelihood of proceeding to court (typically a 4-5 month process), the companies could no longer be confident in closing by year-end, let alone set a new timeframe,” said BTIG analyst Rich Greenfield in a research note.

Questions also arose about whether President Donald Trump is affecting the DOJ review due to the strained relationship between him and CNN. Paul Gallant, an analyst with Cowen Research, said that AT&T is likely to win a court challenge and that public questioning of Trump’s motives could help the case.

"We think AT&T's merger approval chances would be further improved if there's meaningful criticism in the coming days of Trump possibly using antitrust law to target CNN, and either the president or DOJ decide a court challenge isn't worth it, especially with DOJ likely to lose the court case," Gallant wrote.

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