Time Warner Inc TWX 0.94% shares are up another 7.9 percent on Friday following reports that AT&T Inc. T 0.03% could be interested in a buyout. While Time Warner investors are cheering a possible deal, Bank of America analyst Jessica Cohen isn’t convinced of the benefits.
According to Cohen, Time Warner could make a valuable asset for a potential buyer, but AT&T may not be the best fit.
“TWX’s robust film and television library (via Warner Bros.), international growth (via HBO and Turner), strong brands and franchises (incl. CNN, HBO and DC Comics), recent investment in Hulu (10%) and lack of a controlling shareholder position the company as a scarce, presumably ‘for-sale’ media conglomerate in a marketplace hyper-focused on content acquisition and ownership,” Chen explains.
However, she notes that a deal between AT&T and Time Warner would likely have a significant stock component and might not be optimal for shareholders of either company for several reasons:
1. There are no obvious synergies.
2. An all-stock deal could have significant dilutive consequences.
3. There would certainly be a lengthy, and possible costly, regulatory review process.
4. The FCC could choose to set merger conditions that would offset potential revenue benefits
.5. The merger could lead…
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!
