Are Markets Factoring in the AT&T–Time Warner Deal?


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AT&T–Time Warner deal could take place after all

The US Department of Justice’s review of AT&T’s (T) acquisition of Time Warner (TWX) for $85.4 billion has reached an advanced stage, according to the Wall Street Journal. When President Donald Trump was on the campaign trail, he spoke out against media concentration. 

As the deal, which was announced in October 2016, is reportedly approaching close to fruition, Trump’s criticism of Time Warner–owned CNN doesn’t seem to be not affecting the process.

Are Markets Factoring in the AT&T–Time Warner Deal?

According to the Wall Street Journal, the deal is reaching the point where AT&T’s attorneys are discussing conditions of the merger with government regulators. Markets are slowly factoring in the deal as the difference between Time Warner’s stock price and AT&T’s offer price is being bridged, as the graph above shows.

The implications of the deal

The acquisition of Time Warner would turn AT&T into a massive conglomerate, as it would own all Time Warner assets—including Warner Bros. films, HBO, and CNN. AT&T already owns satellite service provider DIRECTV. DIRECTV’s competitors such as Dish Network (DISH) are concerned about the implications of the acquisition, as Dish could be charged more for Time Warner assets such as HBO.

Media, cable, and telecom companies have been on collision course over the last year or so. In July, Discovery Communications (DISCA), the owner of the Discovery Channel, entered a deal to buy Scripps Network (SNI) for $13 billion.