Justice Department Wants AT&T to Sell CNN, Turner or DirecTV
Nov 09 2017
According to a Financial Times source with knowledge of the discussions, Time Warner is being asked to divest itself of CNN, one of two major demands, which the source told the Financial Times were "completely unreasonable" and "a complete perversion of the guidelines of the law".
Some executives at the companies are viewing the stipulation as a political barb aimed directly at CNN, which President Donald Trump has frequently demonized as "fake news". Only place worse may be @NBCNews, @CBSNews, @ABC and @CNN.
"It could be something as significant as all of Turner", said the source, adding that the Justice Department hadn't identified which unit must be sold. "But given DOJ's statement this afternoon, it's important to set the record straight". According to today's trading volume TimeWarner Inc.is BELOW its 20-Day Avg. volume with the stock showing ABOVE Abnormal volume in the past 150 days. The company previously guided for the deal to close by the end of 2017.
The biggest counterweight to such an argument is the Obama administration's 2011 approval of Comcast's acquisition of NBC Universal.
The Stock's Reaction:AT&T dropped 1 percent to $33.02 and Time Warner 1.3 percent to $89.32, and both were trending downward as of publication. Those are continuing on.
Time Warner Inc.is the world's leading media and entertainment company, whose businesses include filmed entertainment, interactive services, television networks, cable systems, publishing and music. It is, however, the condition viewed as the most likely sticking point, since AT&T has opposed it in the past and argued the deal isn't anti-competitive. If Time Warner decides to pull out of the AT&T deal and gets a better offer, it has to pay AT&T $1.73 billion. "I can now say that the timing of the closing of the deal is now uncertain", he told an investor conference.
Perhaps complicating matters now is that the new antitrust head at the Justice Department, Makan Delrahim, has said he prefers "structural" changes to a deal, like selling off assets, rather than making a company promise it will abide by certain rules and having the government monitor a company's behavior after a merger. It would then supply its video - HBO, CNN, TBS and the Warner Bros. movie studio - while providing access to the internet for millions of Americans. "It's hard to imagine an antitrust argument that will be compelling" from the government, he said.
The potential merger has elicited intense opposition from consumer groups and anti-corporate activists, who fear most of the country's creative outfits, broadcasting platforms, and distribution networks are consolidating into sprawling, omnipotent conglomerates. Several Democratic lawmakers have also pushed back against the combination. The firm's quarterly revenue was up 6.0% compared to the same quarter last year. equities research analysts anticipate that Time Warner will post 6.19 earnings per share for the current year.
The Justice Department did not immediately respond to requests for comment on the matter.