MarketLine Blog

AT&T to buy Time Warner

When business acquisitions on this scale are announced they almost inevitably become political – hence extensive investment in political lobbying. Announcing a buyout, therefore, just weeks before one of the most acrimonious presidential races in living memory concludes gives a difficult birth. Both candidates have already declared their displeasure. Some Senators have also voiced concerns and their intent to heavily scrutinize any proposals that come before them. Exactly why this time should be chosen is unclear: it makes the deal far more politicized than need be the case, raising uncertainties as to its future.

Conventionally previous buyouts would be examined to assess the likelihood of success, but the most recent example of one media giant buying another occurred in a different context and received less scrutiny than this deal will. Also, there have been failures since Comcast merged with NBC Universal. That, however, does not wreck the AT&T purchase of Time Warner. Success will depend upon concessions to regulators and the competition. What shape the concessions will take remains to be seen and, whatever they may be, will heavily determine the view of the regulators. Without such knowledge, nobody can realistically predict the outcome.

The NBC and Comcast merger poses problems for AT&T. Agreed concessions have proven to be difficult to enforce, receiving criticism from competitors and Congress alike. From a regulatory standpoint the concessions agreed with Comcast have been a failure. Given the extra attention the latest deal is receiving, if concessions can be agreed upon to make the deal happen, they are likely to be far harsher and closely monitored than was the case for Comcast. Without an adequate precedent to predict what an agreement would look like, uncertainty over the immediate future is rife.

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