AT&T, Time Warner shares dip with worries about deal clearance

Mon Oct 24, 2016 6:14pm EDT
 
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By Jessica Toonkel and Supantha Mukherjee

(Reuters) - Wall Street signaled skepticism on Monday that AT&T Inc would secure the government approvals needed to carry out its planned $85.4 billion acquisition of Time Warner Inc, with shares of both companies falling as analysts scrutinized the deal.

Time Warner shares were trading some 20 percent below the implied value of AT&T's $107.50 per share cash and stock offer, indicating investors doubt that the companies would be able to complete the transaction.

The deal, announced on Saturday, would give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted assets and reshape the media landscape.

Dallas-based AT&T said on Saturday it would need approval of the U.S. Department of Justice and the companies were determining which Time Warner U.S. Federal Communications Commission licenses, if any, would need to transfer to AT&T. Any such transfers would require FCC approval.

AT&T Chief Executive Randall Stephenson said on Monday he expects government clearances for the deal because it is a so-called vertical integration that will not eliminate a competitor, a situation that is viewed more favorably by antitrust enforcers.

"While regulators will often times have concerns with vertical integrations, those are always remedied by conditions imposed on the merger, so that's how we envision this one to play out," Stephenson told CNBC.

Despite its big media footprint, Time Warner has only one FCC-regulated broadcast station, WPCH-TV in Atlanta. Time Warner could sell the license to try to avoid a formal FCC review, several analysts said.

Any decision to review the deal would be made by regulatory officials at the Department of Justice and the Federal Trade Commission, White House spokesman Josh Earnest told reporters on Monday.   Continued...

 
An AT&T sign is seen outside a branch in Rolling Meadows, Illinois, October 24, 2016.    REUTERS/Jim Young