One of the biggest legal battles in the media industry in 2018 will be the Justice Department’s upcoming antitrust case against the $85 billion proposed merger between AT&T Inc. (NYSE: T) and Time Warner Inc (TWX).
After a recent meeting with AT&T CEO Randall Stephenson, Bank of America analyst David Barden says the company is confident it will close the deal. But in the meantime, he is not yet recommending investors buy AT&T stock.
When pressed about the antitrust trial, which is set to begin on March 19, Stephenson predicted the outcome will be positive for AT&T and its shareholders, although he admitted court rulings left on the hands of a judge can be unpredictable. Up to this point, the Justice Department has been unwilling to negotiate potential structural remedies to its antitrust concerns. Barden says that stance could change depending on how the trial plays out.
“AT&T notes that it has put ‘many remedies on the table’ including structural remedies, which could address all the issues in the DoJ complaint, all of which the DoJ has rebuffed to this point,” Barden says.
Earlier this week, the judge overseeing the trial blocked AT&T’s request for a log of communications between the White House and the Justice Department pertaining to the Time Warner merger. President Donald Trump has been publicly critical of the merger, suggesting the deal could lead to higher prices for customers.
Walt Disney Co. (DIS) and Twenty-First Century Fox Inc (FOXA) will be watching the outcome of the trial closely after Disney acquired most of Fox’s cable TV and movie studio assets in December. The government’s willingness to allow the Disney deal could hinge on how the court rules on the AT&T-Time Warner merger.
Comcast Corp. (CMCSA) is also reportedly interested in Fox’s assets and could become a more aggressive buyer if the Time Warner buyout is allowed.
Given all of the uncertainty surrounding the trial and the high costs associated with building its 5G network, Barden says investors should take a cautious approach to AT&T stock for now.
“We believe…
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!