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Could Disney Hold Up The AT&T-Time Warner Deal?

Could Disney Hold Up The AT&T-Time Warner Deal?

Walt Disney Co (NYSE: DIS)'s proposed acquisition of most of Twenty-First Century Fox Inc (NASDAQ: FOXA)'s media and entertainment assets is one of two mega mergers in the media sector, the other being AT&T Inc. (NYSE: T)'s offer to buy Time Warner Inc (NYSE: TWX).

The Analyst

Analysts at Height Securities.

The Thesis

AT&T was quick to announce it will give 200,000 employees a $1,000 bonus after Congress passed a tax reform plan, but there may be ulterior motives behind the move, according to Height. The bonus, coupled with a $1-billion increase to AT&T's capex program, is "clearly aimed at currying favor" with President Donald Trump's administration, the analysts said. 

Disney will provide testimony on the AT&T-Time Warner merger as a "major content player," the report said. For the time being, Disney hasn't hinted what specific points of concern it will raise, but some media reports are suggesting the Department of Justice wants Disney and Fox to testify against the merger.

"In this context, AT&T's announcement this week aligns with the president's agenda that the tax cuts will benefit American workers," the Height report said. "However, will such a move be enough to bring the administration and the DOJ to the table and settle rather than litigating all the way."

Settlement talks between AT&T-Time Warner and the DOJ have so far failed to reach a consensus, and AT&T's CEO Randall Stephenson stated that his company "does not intend to settle this matter out of simple expediency," according to Height. 

Related Links:

AT&T And Time Warner Extend Deadline To Resolve Regulatory Issues

Wall Street Reacts To Disney's Purchase Of Fox's Entertainment Assets

Latest Ratings for DIS

Jun 2019DowngradesOutperformIn-Line
Jun 2019MaintainsOverweight
May 2019MaintainsBuy

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