AT&T, Time Warner stocks fall as groups slam merger
It’s unusual for shares of an acquisition target to decline
AT&T’s $85.4 billion deal to acquire Time Warner is likely to face some of the toughest regulatory scrutiny in recent U.S. history of mergers and acquisitions.
Opposition and calls for Washington regulatory review surfaced soon after the deal was announced to combine AT&T’s broad communications reach with Time Warner’s array of premium entertainment and media content.
Time Warner’s shares fell 3.1% Monday to close at $86.74, below the $107.50 offered by AT&T, reflecting Wall Street’s concern about a deal winning regulatory approval. It’s unusual for the shares of an acquisition target to fall after a deal is announced. AT&T shares slipped 1.7% to close at $36.86.
AT&T and Time Warner say the deal represents the next step in a broad convergence of media and communications and would let consumers get premium content, such as the popular HBO network, however they want it.
However, Robert Weissman, president of non-partisan government watchdog Public Citizen, on Monday urged regulators to “slam down the phone in disgust” when they get AT&T’s phone call seeking approval of the merger.
“It aims to concentrate far too much market, communications and political power in one corporation, threatening to impede the free flow of information, undermine the integrity of the Internet, raise consumer prices and further corrupt our politics,” Weissman said. “This is not a proposal that can be fixed with tweaks, divestitures or conduct agreements. Antitrust authorities should reject this merger proposal out of hand.”
Laura MacCleery, vice president of policy and mobilization for non-profit organization Consumer Reports, said the deal represents a red flag because it seems similar to cable TV and communications giant Comcast’s 2011 takeover of NBC Universal.
That transaction drew criticism from consumer advocates on grounds that the combined company would be free to charge competitors higher prices for access to its programming — costs that would ultimately be passed on to consumers.
“The argument that ‘bigger is better’ rarely rings true for consumers,” MacCleery said of the AT&T-Time Warner deal. “This combined company would have enormous power and influence over what we watch and read, how we get it and how much we pay for it. We are going to keep digging deep into this deal and press regulators to make sure consumers don’t get slammed.”
Sens. Mike Lee, R-Utah, and Amy Klobuchar, D-Minn., the chairman and ranking member, respectively, of the Senate Judiciary Committee’s antitrust panel, signaled plans for a hearing on the proposed corporate tie-up.
“We have carefully examined consolidation in the cable and video content industries to ensure that it does not harm consumers,” they said in a written statement. “An acquisition of Time Warner by AT&T would potentially raise significant antitrust issues, which the subcommittee would carefully examine.”
Although the Department of Justice declined to comment on the transaction, the agency typically reviews most major mergers and acquisitions that have broad impact on the U.S. business landscape and consumers.
This year alone, the agency filed antitrust lawsuits in an effort to block two large health insurance mergers: Anthem’s $48 billion acquisition of Cigna and Aetna’s $37 billion takeover of Humana. Additionally, oil field services giants Halliburton and Baker Hughes scrapped a proposed $28 billion merger in May after the Justice Department filed a lawsuit to block that deal.
The AT&T-Time Warner deal also generated skepticism in and around the White House race.
In a Saturday campaign speech in Gettysburg, Pa., Republican nominee Donald Trump said, if elected, his administration would not approve such a deal “because it’s too much concentration of power in the hands of too few.”
Senior Trump economic adviser Peter Navarro separately said the GOP candidate would “break up the new media conglomerate oligopolies that have gained enormous control over our information and ... are attempting to unduly influence America’s political process.”
Brian Fallon, a spokesman for Democratic nominee Hillary Clinton, told reporters Sunday that Clinton advocates close regulatory review of the deal. “We think that marketplace competition is a good and healthy thing for consumers,” Fallon said.