Senior executives at AT&T Inc. and Time Warner Inc. have met in recent weeks to discuss various business strategies including a possible merger, according to people familiar with the matter.
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The talks, which at this stage are informal, have focused on building relations between the companies rather than establishing the terms of a specific transaction, the people said, asking not to be identified as the deliberations are private. Neither side has yet hired a financial adviser, the people said.
Time Warner Chairman and Chief Executive Officer Jeff Bewkes is a willing seller, said one of the people, if he gets an offer he thinks is fair. Bewkes and his board rejected an $85-a-share approach in 2014 from Rupert Murdoch’s 21st Century Fox Inc., which valued Time Warner at more than $75 billion.
AT&T Chairman and CEO Randall Stephenson is looking to add more content and original programming to his Dallas-based telecommunications company, said another person familiar with the matter.
My personal favorite:
AT&T has transformed itself over the last decade from a regional phone company to a national telecommunications powerhouse.
That's because, in 2005, that "regional phone company" was SBC, who took over AT&T and now wears its face as a hat. SBC was Southwestern Bell, who acquired PacBell in 1997, and swalloed BellSouth in 2006.
Last edited by Isgrimnur on Mon Oct 24, 2016 12:41 pm, edited 1 time in total.
$85.4B announced over the weekend. And they may only face DOJ scrutiny, as the FCC only controls broadcast licenses.
The merger will be analyzed by the Department of Justice, but AT&T has said the FCC will be involved only if any FCC licenses are transferred to AT&T. A TV station is an example of something that requires an FCC license, but AT&T said that it and Time Warner are still "determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction."
The reason for this uncertainty is that "despite its big media footprint, Time Warner has only one FCC-regulated broadcast station, WPCH-TV in Atlanta," Reuters reported. "Time Warner could sell the license to try to avoid a formal FCC review, several analysts said." (Time Warner Inc. is completely separate from Time Warner Cable, which was sold to Charter this year after an FCC review.)
WPCH-TV, which is unaffiliated with any major network, is a small station that broadcasts re-runs and old movies, and it's likely worth very little relative to the $85.4 billion AT&T/Time Warner deal, Bloomberg reported. "Companies use sales, transfers, and spinoffs around larger deals in order to face friendlier regulatory review 'all the time,' Bloomberg Intelligence analyst Geetha Ranganathan said in an interview," Bloomberg wrote.
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The DOJ and FCC follow very different processes when reviewing mergers. The FCC can block a merger if it doesn't serve the public interest, and the burden is on the merging parties to prove that Americans will benefit.
The DOJ can block mergers by suing in federal court, but the federal agency faces the burden of proof and must convince a court that the merger would violate antitrust laws. The DOJ and FCC coordinate on merger reviews when they're both involved, and their combined influence was enough to sink Comcast's attempt to purchase Time Warner Cable in 2015 and AT&T's attempt to purchase T-Mobile USA in 2011. With AT&T/Time Warner, the DOJ could be going it alone.
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Still, the DOJ by itself could either try to block the merger or allow it to proceed only if AT&T signs a consent decree with conditions designed to prevent competitive harm, similar to the decree signed by Comcast when it bought NBCUniversal. Consumer advocates, AT&T's competitors, and lawmakers may try to influence the DOJ by speaking out against the deal.
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AT&T says it expects to close the Time Warner merger by the end of 2017.
I saw a lot of ink/video about this the last two days. I'm skeptical just based on the size but this isn't like say Comcast/TW where you have a big horizontal consolidation. This one makes more sense - i.e. less risk to their respective markets in the sense they don't have a lot of overlap. I'd just expect there to be a *lot* of conditions on it so that they don't use this new structure to squeeze competitors in the market. I'm also a little concerned on the finance side. They'll go to something like 250% debt to EBITDA which is sorta crazy. I saw Stephenson and Fewkes on Squawkbox today defending the financing as being high but manageable. Ok, great. In good times perhaps but what happens in a downturn and subscribers suddenly aren't paying for mobile and/or the content.
At a contentious meeting on Monday, the Department of Justice's antitrust chief gave AT&T a choice: If you want us to approve your purchase of Time Warner, either sell off CNN's parent unit or DirecTV. Otherwise, we'll see you in court.
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AT&T could either divest DirecTV, the satellite broadcaster that it purchased two years ago, or it could divest all of Turner, the unit of Time Warner that includes CNN.
"Threatening Turner is a fig leaf for threatening CNN," one of the sources said.
AT&T is said to be reluctant to sell assets, especially Turner, which represents a significant portion of Time Warner's profits.
As for DirecTV, "it's a false choice," one of the sources said, saying that the offer seemed designed to disguise an attempt to punish CNN.
On Monday, AT&T squares off against the federal government in a trial that could shape how you get - and how much you pay for - streaming TV and movies.
AT&T says it needs to gobble up Time Warner if it's to have a chance against the likes of Amazon, Netflix and Google in the rapidly evolving world of video entertainment.
The Justice Department's antitrust lawyers say that if AT&T and Time Warner are allowed to combine, consumers will end up paying more to watch their favorite shows, whether on a TV screen, smartphone or tablet.
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AT&T'S CASE
Almost 60 percent of Americans still get TV primarily from traditional cable services, according to a Pew Research Center report. But that is starkly divided by age. About 61 percent of people aged 18 to 29 primarily use streaming services - compared with 10 percent of people aged 50 to 64.
AT&T says the merger is necessary to compete as more people use streaming services like Netflix, Amazon and others. It denies the government's assertion that the merger will limit choice and lead to higher prices for consumers.
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The government brushes off the argument that the proposed purchase is about offering consumers more choice. Instead, it says, the deal will lead to less competition and innovation while bringing higher prices for consumers, as AT&T could withhold Time Warner programming from other distributors or offer it more cheaply only on its own network.
In handing down his ruling, federal judge Richard Leon said that the Justice Department – whose antitrust chief, Makan Delrahim, brought the rare case – failed to provide sufficient proof that the deal would harm competition or consumers. He also warned the U.S. government against bringing an appeal if the purpose was to try to stymie the deal, though the DOJ has not indicated its next steps.
In handing down his ruling, federal judge Richard Leon said that the Justice Department – whose antitrust chief, Makan Delrahim, brought the rare case – failed to provide sufficient proof that the deal would harm competition or consumers. He also warned the U.S. government against bringing an appeal if the purpose was to try to stymie the deal, though the DOJ has not indicated its next steps.
The appeal warning is interesting. Sounds like he was suspicious that DOJ had not brought the suit in good faith (which is not unreasonable).
In another summary I read, he was more explicit that they shouldn't seek a stay of his ruling as part of any appeal. Such a stay would have the effect of killing the merger, as by its terms it needs to close by 6/21.
As for my personal feelings, bring on the free HBO for employees!
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I am Dyslexic of Borg, prepare to have your ass laminated.
I guess Ray Butts has ate his last pancake. http://steamcommunity.com/id/daehawk
"Has high IQ. Refuses to apply it"
Yesterday, the Department of Justice appealed the recent merger of AT&T and Time Warner, a deal that seemed effectively settled and officially closed last month. The government is asking the DC Circuit Court of Appeals to overturn a ruling that was overwhelmingly in favor of the merger. It’s also suggesting it could put the brakes on similar deals by other companies, which have been emboldened by the decision.
This appeal doesn’t have any immediate effects on AT&T and Time Warner’s plans since the Justice Department didn’t ask for a legal stay while it filed its appeal. But it signals the department’s plans to keep fighting consolidation, which could help shape the landscape for future mergers.
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Judge Leon’s ruling argued that AT&T and Time Warner could offer better and cheaper options to customers by merging. (The Justice Department basically made this case for the companies, estimating that DirecTV and U-verse users could save a total of around $350 million per year.) Leon also claimed that vertically integrating content production and distribution — like the same entity making and distributing a TV show, as Netflix and Amazon do — would let producers gather more data about what customers liked, and sell more valuable targeted ads instead of charging subscribers more.
As we’ve explained before, this argument is deeply flawed, and we’re already seeing warning signs. AT&T gestured toward fulfilling its promise of lower prices during the trial, announcing a new $15 live TV bundle without sports channels. Then, as soon as the merger was approved, it raised the price on its existing DirecTV Now service from $35 to $40 per month. So customers who want to downgrade their service will save money, but ones who maintain the status quo will pay more.
A federal appeals court upheld AT&T’s $85 billion merger with Time Warner on Tuesday, handing the telecom giant a major victory in its months-long legal battle against Justice Department regulators who had alleged the deal was anti-competitive.
The outcome is a significant defeat for the Justice Department’s top antitrust chief, Makan Delrahim, who legal analysts say took a big risk in suing AT&T and who has now lost twice at court. The Justice Department did not immediately respond to a request for comment, nor to whether the agency will seek to escalate the case to the Supreme Court.
In its decision, a three-judge panel said the government failed to prove its claims that the lower court had misapplied “fundamental principles of economics” when assessing the deal’s potential impact on consumers and AT&T’s rivals.
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In its initial case, the Justice Department had relied on a sophisticated economic model that claimed consumers could pay millions more per year for TV content if AT&T tried to force its rivals to pay higher fees in exchange for its programming. AT&T hired its own economist to undercut the theory.
Ultimately, the evidence showed it is “still in the best interests” of AT&T and Time Warner to sell its content to as many cable companies as possible, not seek to restrict access in exchange for higher payments, the appeals court said Tuesday.
This is a pretty predictable result, antitrust-wise. The aggressiveness of this merger challenge was part of the suspicion that it was motivated by Trump's animus against CNN.
El Guapo wrote: ↑Tue Feb 26, 2019 3:26 pm
This is a pretty predictable result, antitrust-wise. The aggressiveness of this merger challenge was part of the suspicion that it was motivated by Trump's animus against CNN.
That's hilarious. So he took on the corporate monster not out of greed for his minions, but out of personal affront!
El Guapo wrote: ↑Tue Feb 26, 2019 3:26 pm
This is a pretty predictable result, antitrust-wise. The aggressiveness of this merger challenge was part of the suspicion that it was motivated by Trump's animus against CNN.
That's hilarious. So he took on the corporate monster not out of greed for his minions, but out of personal affront!
To be fair, there isn't much in the way of direct evidence that that was the motivation for the merger challenge (i.e., I haven't seen any reports on leaks about that). It's just that challenges to vertical mergers are pretty rare, and it's especially surprising for a Republican administration to be so aggressive on antitrust.
El Guapo wrote: ↑Tue Feb 26, 2019 3:26 pm
This is a pretty predictable result, antitrust-wise. The aggressiveness of this merger challenge was part of the suspicion that it was motivated by Trump's animus against CNN.
That's hilarious. So he took on the corporate monster not out of greed for his minions, but out of personal affront!
To be fair, there isn't much in the way of direct evidence that that was the motivation for the merger challenge (i.e., I haven't seen any reports on leaks about that). It's just that challenges to vertical mergers are pretty rare, and it's especially surprising for a Republican administration to be so aggressive on antitrust.
El Guapo wrote: ↑Tue Feb 26, 2019 3:26 pm
This is a pretty predictable result, antitrust-wise. The aggressiveness of this merger challenge was part of the suspicion that it was motivated by Trump's animus against CNN.
That's hilarious. So he took on the corporate monster not out of greed for his minions, but out of personal affront!
To be fair, there isn't much in the way of direct evidence that that was the motivation for the merger challenge (i.e., I haven't seen any reports on leaks about that). It's just that challenges to vertical mergers are pretty rare, and it's especially surprising for a Republican administration to be so aggressive on antitrust.
At least in this century.
Ahem...there *wasn't* such direct evidence. Just needed to wait a couple weeks, I guess:
I haven't read the whole thing yet, so this is still a step away from (1) this being communicated to DoJ; and (2) DoJ's decision to sue. But it's hard to imagine that DOJ antitrust didn't get some kind of message on this.
CBS, the nation’s most-watched television network, went dark for more than 6.5 million AT&T customers early Saturday after the two media giants couldn’t agree on a new contract.
The network, with hits like “Big Brother,” and Stephen Colbert’s “Late Show,” was cut off from AT&T’s satellite service DirecTV as well as the landline-delivered U-verse and DirecTV Now, the live streaming product.
The companies had been negotiating for several weeks but failed to agree on pricing and streaming rights before the contract expired on Saturday at 2 a.m., Eastern time.
Smoove_B wrote: ↑Sat Jul 20, 2019 2:29 pm
Terrific. Just verified I no longer have CBS:
CBS, the nation’s most-watched television network, went dark for more than 6.5 million AT&T customers early Saturday after the two media giants couldn’t agree on a new contract.
The network, with hits like “Big Brother,” and Stephen Colbert’s “Late Show,” was cut off from AT&T’s satellite service DirecTV as well as the landline-delivered U-verse and DirecTV Now, the live streaming product.
The companies had been negotiating for several weeks but failed to agree on pricing and streaming rights before the contract expired on Saturday at 2 a.m., Eastern time.
Who cares? It's not as if there's an abundance of quality programming shown on CBS nowadays.
"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." — P. J. O'Rourke
At a contentious meeting on Monday, the Department of Justice's antitrust chief gave AT&T a choice: If you want us to approve your purchase of Time Warner, either sell off CNN's parent unit or DirecTV. Otherwise, we'll see you in court.
...
AT&T could either divest DirecTV, the satellite broadcaster that it purchased two years ago, or it could divest all of Turner, the unit of Time Warner that includes CNN.
"Threatening Turner is a fig leaf for threatening CNN," one of the sources said.
AT&T is said to be reluctant to sell assets, especially Turner, which represents a significant portion of Time Warner's profits.
As for DirecTV, "it's a false choice," one of the sources said, saying that the offer seemed designed to disguise an attempt to punish CNN.
Telecom giant AT&T announced Monday a deal to combine its content unit WarnerMedia with Discovery, paving the way for one of Hollywood’s biggest studios to compete with media giants Netflix and Disney.
Under the agreement, AT&T will unwind its $85 billion acquisition of Time Warner, which closed just under three years ago and form a new media company with Discovery. The deal would create a new business, separate from AT&T, that could be valued at as much as $150 billion, including debt, according to The Financial Times.
AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%, it added.
If approved by regulators, the deal effectively reverses AT&T’s years-long plan to combine content and distribution in a vertically integrated company. The companies said the deal is expected to close in the middle of 2022.
Nah, I'm firmly entrenched in the transport/traditional communications and business side of AT&T. Interestingly, we recently reorg'ed the legal department, and they opened things up for traditional T lawyers to move to the WM side (and vice versa) or even move into the recently spun off DirecTV side. I might have considered it, but I'm relatively recently into my current gig and wanted to keep on that for at least a while.
coopasonic wrote: ↑Mon May 17, 2021 11:28 am
I fear this means I will lose my free HBO Max. I mean I don't fear it too much as I only watched a couple shows on it, but there is fear!
That's my fear too, and I watch HBOmax way more than I watch any other service!
Did I not bitch about AT&T in this thread? Anyway, this is I guess a fitting and predictable outcome for the immense stupidity of the business decisions being made. What irks me is the guy who made most of them escaped long ago with tons of money and then they promoted the other guy so high it doesn't matter to him.
I was working for Directv at the time they bought it, in possibly the most enjoyable job I'd ever had. AT&T came in and ruined all of that. Here's what it looked like from my lowly point of view:
- T buys a premiere satellite tech company
- T forces Directv to spend a ton of resources and cash on streaming, of which it has no experience in, cannabilizing its own customers to promote it
- T says satellite will be dead in 2020
- T spends more money on its own streaming, further cannabilizing its own customers to promote it
- T buys Warner even though it has no experience in entertainment industry
etc
I may have simplified it a bit here, but it just grosses me out immensely. I don't know if satellite would have "died" either way, but it sure didn't help that the company that bought the premiere satellite technology immediately chose to dismantle it piece by piece and then invest only in its direct competitor.
In my dreams, Apple would have bought Directv and actually invested in it, finding new ways to improve and use the technology. There are still advantages that satellite has over streaming, in that in can blanket huge swaths of area instantaneously and provide high bandwidths (downstream only) simultaneously. It's not the tech that's the issue, it's the lack of creativity to use it properly.
My sister was working for AT&T in management when this was all going down. She could tell it wasn't going to end well and ran for the hills. Looks like she made the right move.
Capitalism tries for a delicate balance: It attempts to work things out so that everyone gets just enough stuff to keep them from getting violent and trying to take other people’s stuff.
Octavious wrote: ↑Mon May 17, 2021 1:03 pm
My sister was working for AT&T in management when this was all going down. She could tell it wasn't going to end well and ran for the hills. Looks like she made the right move.
This is understating it - lol. She was in the Executive Training program (post-MBA) smack dab in the middle of the DirectTV merger and pulled the ripcord.
ImLawBoy wrote: ↑Mon May 17, 2021 1:23 pm
I mean, you guys know AT&T isn't going under because of this, right?
Oh not even close but it has been horrible to watch because it has led to significant value destruction. And the people who made the calls all got rewarded.
Edit: As an aside, I have been challenging my investment guy about why T is even in my portfolio. It has been a stinker for over a decade. Luckily fopr AT&T the main competitor made the same dumb moves.
Octavious wrote: ↑Mon May 17, 2021 1:03 pm
My sister was working for AT&T in management when this was all going down. She could tell it wasn't going to end well and ran for the hills. Looks like she made the right move.
This is understating it - lol. She was in the Executive Training program (post-MBA) smack dab in the middle of the DirectTV merger and pulled the ripcord.
Eh same thing just more detail. Right when I was asking for the free tv she was offering!
Capitalism tries for a delicate balance: It attempts to work things out so that everyone gets just enough stuff to keep them from getting violent and trying to take other people’s stuff.
ImLawBoy wrote: ↑Mon May 17, 2021 1:23 pm
I mean, you guys know AT&T isn't going under because of this, right?
I actually think this is the smartest move they've made in a long while - invest in the entertainment business but don't try to run one when you have no idea what you are doing.
Right when I was asking for the free tv she was offering!