One of the largest mergers in media history may have reached an impasse now that the Justice Department says AT&T Inc. (T) must sell either sell Turner Broadcasting or DirecTV in order to complete its $85 billion buyout of Time Warner Inc (TWX).
Time Warner shares tumbled 6.5 percent following a statement from AT&T CEO Randall Stephenson indicating that the company is not planning on parting ways with Turner, which includes popular news outlet CNN. “Throughout this process, I have never offered to sell CNN and have no intention of doing so,” Stephenson says.
The two companies had previously expected the deal to close by the end of 2017.
The Justice Department’s demands are raising concerns among some onlookers because the merger was widely considered to be vertical in nature. President Donald Trump has been highly critical of CNN’s coverage of his administration, repeatedly calling CNN’s reporting “fake news.
In a campaign rally in October 2016, then-candidate Trump called the merger an example of media “power structure” that was suppressing his supporters. He called the merger “a deal we will not approve in my administration.”
The Justice Department denies that Trump is involved in the negotiations, according to The New York Times. Justice Department officials say that it was AT&T that offered to divest CNN, but the company strongly denied the statement.
MoffettNathanson analyst Craig Moffett says he would be surprised if AT&T is unwilling to let go of CNN if needed. “What AT&T wanted and still wants out of this deal is the ability to create content bundles with telecom, and that’s fundamentally an entertainment story,” Moffett said on CNBC. “While AT&T and Randall Stephenson have said they’d still like to own the CNN business and they think it’s good business, it’s certainly not a make or break asset for whether or not AT&T would want to continue to do this deal.”
Barclays Capital analyst Kannan Venkateshwar says the potentially political element of the Justice Department’s demands is atypical of an antitrust review.
“This … would be unprecedented as DOJ’s deal review process has been quite apolitical and based purely on competitive considerations,” Venkateshwar said, according to the LA Times.
Investors have become…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
