The consensus is that the proposed acquisition of Time Warner by AT&T is a long shot.
The conversations between the two companies were first reported last week by Bloomberg. The deal became a reality with an announcement on Saturday. AT&T is offering $107.50 per share. The New York Times story on the acquisition puts the total price tag at $85.4 billion.
The pairing of Time Warner’s content and AT&T multiple distribution channels is the key to the deal. Not surprisingly, it is the key to the opposition as well. Reaction from the first couple of days suggests that the odds of the deal closing are not good.
The reaction of the presidential candidates told a telling tale. Characteristically, Trump was forthright in his reaction, which was that his administration would be against it. A big part of that is that the acquisition was perfect fodder for a candidate who maintains that the media has too much power and is undermining his candidacy. The Clinton campaign, also characteristically, was more guarded. It expressed the same concerns about media power concentration as Trump, however.
The bottom line is that if Donald Trump and Hillary Clinton agree that the deal is problematic, its future is not promising.
The Wall Street Journal’s reaction piece to the deal hit several points. It mentioned the regulatory concerns and offered CEO Randall Stephenson’s response, which seemed less than compelling. The story also points to analysis from Citibank that questioned the logic of the deal beyond the regulatory issues. The analyst said that Citibank is skeptical of the inherent benefits of vertical integration of delivery platforms and content. Finally, it pointed to the possibility of AT&T’s already large debt load creating “a distraction.”
The Los Angeles Times’ Michael Hiltzik essentially makes the point that the very rationale for the deal is that competitors’ content will be slowed or otherwise put at a disadvantage compared to AT&T’s. After all, what other reason beyond pushing its content ahead of others’ is compelling enough for AT&T to be interested – at least to the tune of $85.4 billion?
David Morris makes the same point at Fortune:
The deal’s risk to consumers is clear. Following its acquisition of DirecTV, AT&T is the largest pay-TV operator in the US. It is also the second-largest wireless data provider and the third-largest broadband provider. That means AT&T controls a huge proportion of the bandwidth consumers use across multiple platforms. Buying a content producer like Time Warner would give it a big motive to make its own content faster or more accessible than competitors’.
It seems unlikely this deal will be allowed to go forward. It is difficult to identify a benefit to the public. Indeed, it seems more likely to hurt subscribers by tilting the playing field against other content providers. This, combined with its political unpopularity, makes it unlikely that the deal will be approved in a form that is acceptable to the two companies.
Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.
