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Is the Trump administration going to stop the AT&T-Time Warner deal?
That’s the question of the day for media executives, government officials and investors, occasioned by a Wall Street Journal story which said the U.S. Department of Justice may sue to block the deal.
The Journal’s piece was enough to send Time Warner shares down by more than 5 percent, though they have recovered a bit. And it spurred a flurry of confused phone calls throughout the media industry, where conventional wisdom was that the deal would be approved sometime this fall.
But don’t expect a real answer anytime soon. Right now, there’s so little information out there that people are scrutinizing the slightest tea leaves.
For instance: Did Makan Delrahim, the DOJ’s new antitrust boss, really make ad-lib comments during a speech at New York University last week — and if so, were they really directed at the AT&T-Time Warner deal, even if he didn’t mention either company?
Here’s another one: Why does the WSJ’s newest version of its story offer more hedges and caveats than the original?
This morning, the Journal said the DOJ was “actively considering a lawsuit to challenge” the deal; now it says the Feds are “laying the groundwork for a potential lawsuit” but only “if the government and companies can’t agree on a settlement.”
Time Warner officials didn’t offer any comment on the story. AT&T did, with an extended what-me-worry statement:
When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.
Here’s a more nuanced take on today’s news, offered up by a media executive who doesn’t work at either company and doesn’t like the idea of the merger: Today’s story is leverage from Delrahim to eventually extract concessions from AT&T.
Under this theory, the reason you’re seeing it now is Delrahim only just started on the job and wants to slow things down, even though the deal has been working its way through Washington for a year. And floating the idea of a lawsuit is much different from filing a lawsuit, which you would actually have to win in court.
A more pessimistic take, from someone who would like the deal to go through: A threat of a lawsuit is a very big deal, because if the DOJ carries through, it can tie up the deal for years. Of note, Comcast* scuttled its plan to buy Time Warner Cable two years ago when the DOJ leaked word that it would sue to stop that merger.
One thing we haven’t heard anyone discuss yet: Donald Trump’s supposed animus for CNN, the Time Warner-owned cable news network he swears he doesn’t watch but frequently complains about.
Steve Bannon, Trump’s former adviser, reportedly pushed Trump to kill the deal over the last year. But that’s different from figuring out a legal reason to argue that a telecom company shouldn’t own the programmer.
And here’s a shrug from Barclays analyst Kannan Venkateshwar, who politely suggests that “the news flow could be a bit misleading.”
His argument, which parallels the official and unofficial ones we are hearing from AT&T and Time Warner: “Given the difficulty of proving the anticompetitive nature of a vertical deal in court, specially with directly comparable precedents like Comcast-NBCU, we continue to believe that the deal is likely to close.”
* Comcast’s NBCUniversal is a minority investor in Vox Media, which owns Recode.
Additional reporting by Tony Romm.
This article originally appeared on Recode.net.
