AT&T Inc. To Defend the Merger Today
AT&T Inc. (NYSE:T) has been under fire ever since President-elect Donald Trump gave the company a piece of his mind about AT&T-’s $85.0-billion deal with Time Warner Inc (NYSE:TWX). This deal makes Trump uncomfortable, as it would lead to a concentration of power.
It is not clear what Donald Trump would eventually do about the AT&T-Time Warner merger. However, more clarity will emerge today when the company executives face the senate antitrust subcommittee. T stock gained about two percent on Tuesday and closed at $39.35.
AT&T Inc. Chairman and CEO Randall Stephenson plans to tell senators today that his company’s deal with Time Warner Inc will “disrupt” the long-established cable TV model in ways that will benefit consumers, according to his prepared testimony. (Source: “AT&T CEO: Time Warner Deal Would ‘Disrupt’ Cable TV Model,” The Wall Street Journal, December 6, 2016.)
“It would be a gross mistake to view this transaction as anything but pro-competitive,” said Randall Stephenson. He further added that the deal will create more competition for consumers while accelerating the next generation of advanced wireless broadband.
AT&T calls this a vertical merger, in which the company gets access to Time Warner’s media properties like HBO and CNN. The new entity hopes to compete with the likes of Netflix, Inc. (NASDAQ:NFLX) by delivering content and creating new customer experiences.
AT&T had acquired the satellite television company DirecTV (NASDAQ:DTV) earlier. It launched “DirecTV Now” on November 30, at $35.00 for 100 channels streamed to mobile devices and Internet set-top boxes. Randall Stephenson said that the company hit its December goal for new subscribers the day that the streaming TV service launched.
“The early demand for DirecTV Now has been rather dramatic,” he said at an investor conference on Tuesday. He was also pleased with how many customers have purchased HBO and Cinemax, which are $5.00 add-ons to the core service. Stephenson had expressed his optimism regarding Donald Trump earlier. He is hopeful that decreasing corporate taxes and easing regulations will boost economic growth. (Source: “AT&T calls early DirecTV Now demand ‘rather dramatic’,” CNET, December 6, 2016.)
If all goes according to the plans of the executives of both companies, then the AT&T-Time Warner merger may easily go through. However, the premise that the deal benefits the consumer may not be enough to convince Donald Trump. He had earlier remarked that, if elected, his administration will do everything to block the deal.
Donald Trump Would Be Hard to Please for AT&T-Time Warner Merger
With the way Donald Trump is following up on his campaign promises and targeting different companies, it looks like it may not be an easy ride for the AT&T-Time Warner merger. Trump has been an open critic of CNN, and the deal would mean that AT&T gets access to the network.
One of the possibilities is that Donald Trump may propose changes to the AT&T-Time Warner merger to keep CNN out of the equation. Whatever happens, Wednesday’s senate hearing will make clear how prepared the company executives are and what the future may hold for the AT&T-Time Warner merger.