In October 2016, Time Warner and AT&T agreed to merge as part of a deal which would see AT&T paying $85.4bn for the merger to take place. The total transaction value would further take the deal up to $108.7bn adding in Time Warner’s debt. Despite the hefty cost, the merger deal makes perfect sense from a business point of view since through a merger with telecommunications giant AT&T, Time Warner is able to broadcast its globally recognized digital content to a much wider audience. AT&T meanwhile will be able to attract an increasing number of customers to its payTV and mobile network services due to the increased and desirable amount of Time Warner content it will be in possession of post-merger. It is no surprise then that AT&T expects its profits to be boosted strongly by this merger and has estimated it will earn $1bn in savings within three years after the merger is finalized.
However despite receiving director and shareholder approval, the merger deal still has to be approved by the US Department of Justice, which decides on the basis of competition and market concentration whether merger deals should be allowed to go ahead. As Time Warner and AT&T are not direct competitors there should not be much difficulty in the getting the deal to go through. However the Trump factor makes it impossible to predict the future completely, since he has indicated a strong opinion against this deal. As part of his campaign against “fake news” Trump has made his disagreement with CNN coverage no secret. Members of his administration have been reported as stating that the government is using its disagreement with the merger deal as a “potential point of leverage” with Trump clearly wanting CNN President Jeffery Zucker to resign before he is likely to approve of the merger deal.
Whilst it remains to be seen whether his pressure can have a tangible effect on the deal, a resignation of Zucker may just be a meeting in the middle between Trump and AT&T, with the latter wanting the deal to go ahead as soon as possible, whereas Trump will be able to claim a moral victory if Zucker is made to resign.