Why AT&T Merger Critics Can’t Be Reckless



Media and telecom merger chatters

Although some media and telecom companies have voiced their opposition to AT&T (T) merging with Time Warner (TWX), they might do best to be careful with what they say to regulators to back their claims—it could make things difficult in the future.

For example, Sprint (S) parent SoftBank is reported to have discussed with T-Mobile (TMUS), Comcast (CMCSA), and Charter Communications (CHTR) the possibility of acquiring or at least investing in the struggling wireless operator. Sprint has not seen a profit for years and it carries a huge debt load.

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Sprint eager for a deal

SoftBank has also reportedly made overtures to Warren Buffett of Berkshire Hathaway (BRK.A) (BRK.B) and cable mogul John Malone of Liberty Broadband (LBRDA) about investing in Sprint.

According to a Wall Street Journal report, Malone has tried to persuade Charter and Comcast to team up to acquire Sprint to bolster their wireless push. Comcast and Charter could use Verizon’s network to run their wireless operations. But there’s still a feeling that they would get a better network reseller deal working with Sprint instead of Verizon.

Watch your words

If AT&T peers are contemplating mergers of their own, they’ll likely careful what they say, lest they endanger their own future consolidation deals.

The media and telecom sectors could see more consolidation attempts as the two sectors increasingly converge. AT&T and Verizon have been actively buying media assets, while cable providers like Comcast are actively showing more interest in wireless assets.

Notably, AT&T generated $36.5 billion in video entertainment revenues in 2016, which was up from $20.3 billion in 2015.


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