AT&T CEO Randall Stephenson (right) Getty/Alex Wong
President-elect Donald Trump’s transition team has assured AT&T that, contrary to Trump’s campaign rhetoric, the proposed merger of AT&T- and cable company Time Warner will be treated without prejudice, according to the Financial Times .
"After talking with the president-elect’s team, AT&T executives are confident that their deal has a good chance of passing regulatory scrutiny, people informed about the conversation said," the FT wrote on Thursday .
There have been concerns that the government, particularly under Donald Trump, would move to block the $85 billion deal. Trump certainly helped give that impression.
“In an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN — a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” Trump had said while campaigning.
This attitude seems to have softened, especially with Trump’s appointment of two former officials with favorable records on the issue to his transition team.
The FCC question
But even before these recent developments, AT&T was telling Wall Street not to worry.
At RBC’s Technology, Internet, Media and Telecommunications (TIMT) Conference in New York last month, AT&T management suggested there wouldn’t be any trouble with the merger.
One big reason AT&T was optimistic at the conference is because the company believes the merger won’t be under the jurisdiction of the FCC.
"The only scenario in which the FCC would have jurisdiction is if Time Warner transfers certain broadcast licenses to AT&T," RBC analyst Jonathan Atkin, who viewed the presentation by AT&T’s Chris Womack and Michael Black, wrote. "The company believes these licenses (primarily business radio licenses and licenses related to Time Warner’s ownership of the WPCN superstation) can be offloaded easily, obviating the need for an FCC review."
That would mean the merger would only need to clear the Department of Justice, which AT&T is optimistic about.
"The major difference between an FCC and DOJ review is that a DOJ review provides AT&T legal recourse while the FCC, if it chooses not to support the deal can defer the issue to an administrative law judge, a process that can last upwards of three years, usually resulting in the dissolution of the deal," Atkin wrote.
AT&T said it liked its odds, and expects the timeline on the merger to be 12-14 months.
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