UPDATE AT&T announced Saturday that it plans to buy Time Warner for more than $85 billion, Inside Towers reported. The Wall Street Journal said that content is where growth potential lies, with smaller carrier rivals “whittling away at their subscriber base.”
In Monday’s Vox report, shares of the telecom utility were down and those of the media conglomerate were up. Vox said that the combined company, if the merge happens, “may well prove to be a well-managed and profitable conglomerate. But in order to purchase Time Warner, AT&T and its shareholders are going to have to pay a premium over the current price of its stock.” The Vox report said that there’s no reason to believe Time Warner’s shares are undervalued, but “AT&T’s board and management, in other words, appear to be simply wasting AT&T’s shareholders’ money.”
Even if the sale does go through, Vox said that the government probably won’t let some parts of the deal happen, citing the precedent of 2010, when Comcast bought NBCUniversal. At the time of the announcement, both companies wanted to combine content and infrastructure, which, according to Vox, raised red flags for regulators “who worried that Comcast was seeking to use its strength in the relatively low-competition infrastructure industry to gain leverage in the content industry.” The government agreed to approve the merger “only on condition that Comcast and NBCUniversal disavow making any special deals with each other that were not available to other companies.” The new potential merger’s happening and subsequent deals, Vox noted, will largely depend on who lands in the new administration come November.
October 25, 2016
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