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Here’s why the AT&T-Time Warner merger just got approved

14 June, 2018, 15:07 | Author: Samuel Sharp
  • AT&T-Time Warner Merger Gets The Green Light From Federal Court

Comcast's announcement of a $65 billion bid for 21st Century Fox entertainment assets - 19% higher than Disney's prior offer - stirred up the companies' stocks anew in after-hours trading Wednesday before they settled down. Whoever wins the bid, should it be accepted by both companies, will acquire much of Fox's film and TV assets, as well as its global holdings (including stakes in Sky and in Star India) and its stake in Hulu.

Fox said it had received the Comcast offer and would carefully review it. Disney had no immediate comment. Comcast waited to make their second bid a day after a federal judge approved a merger between AT&T and Time Warner.

The Fox board was scheduled to vote on whether or not to accept the Disney deal on July 10, so we may be in for a flurry of new bids over the next few weeks.

Fox's board had rejected a bid from Comcast previous year in part due to concerns over regulatory approval.

Judge Leon said the USA failed to prove the merger would give Time Warner increased power to negotiate fees for its content.

Comcast said it has offered $65bn (£48.6bn) in cash for Fox's film and television studios and global businesses. Cable company Charter chtr has not been involved in any rumored deals lately, and Verizon vz has talked down interest in buying a major media company while selecting for its next CEO an executive with experience in the communications infrastructure business.

"We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government's lawsuit to block our merger with Time Warner", David McAtee, AT&T General Counsel, said in a statement. It also agreed to reimburse Fox for the $1.5 billion-plus break-up fee it agreed to pay to Disney if their deal doesn't go through.

The merger brings together AT&T's data and distribution pipeline with Time Warner's vast content library as the combined company competes with tech giants like Facebook, Amazon, Apple, Netflix, and Google - also known as FAANG.

U.S. government regulators tried to block the US$85 billion (NZ$120bn) deal, arguing the merger would reduce competition in pay TV and lead to higher prices for consumers.

The bid sets up a fight with Disney, which announced its own plan to acquire those businesses a year ago.

Comcast said its proposal is "at least as favourable" to shareholders as Disney's plan. Both Comcast and Disney have their own stakes in Hulu, and whoever gets Fox would control the majority. Comcast's official counterbid now pressures Disney to come up with a higher offer for Fox - lest it have compelling entertainment assets slip through its hands at a time when technology giants are storming Hollywood, forcing traditional media companies to bulk up.

While Comcast has made no secret of its desire to buy up Fox from the Murdoch clan, the chances of any deal actually going through were undercut by fears the merger would not be passed by government regulators.



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