AT&T-Time merger trials
The proposed $85.4 billion merger of telecom (telecommunications) behemoth AT&T (T) and media company Time Warner (TWX) is currently facing trial in US court after the United States Department of Justice blocked the deal and filed a lawsuit against it. Both parties are now awaiting the outcome, which is expected to arrive by June 12.
The proposed AT&T–Time Warner merger, which was announced in October 2016, has been long delayed due to several issues. Both companies now expect to close the merger by June 21.
Factors working against the deal
According to prominent antitrust expert Herbert Hovenkamp in a story published on the New York Post‘s website, the US government will likely win the case to block the $85 billion deal. Hovenkamp stated that the Department of Justice has tried hard to prove that the merger will cause harm to customers, as the combined company could raise prices to boost its profits.
Apart from antitrust regulators, US President Donald Trump has also expressed disapproval for the merger. Recode’s managing editor, Ed Lee, is in AT&T’s favor and believes that the merger has a 60%–70% chance of going through.
AT&T would benefit from the merger
The proposed acquisition is expected to significantly benefit AT&T, which has been losing its postpaid phone subscriber base for the past several quarters due to cord cutting. The combined entity would create a stronger company to take on new online video players such as Netflix (NFLX), Amazon (AMZN), and Alphabet’s (GOOGL) YouTube while benefiting from new advertising possibilities.
AT&T believes that the addition of Time Warner, which is the owner of cable channels HBO and CNN, could boost its revenue and help it to compete in the wireless market by way of content ownership.