Court Approves AT&T’s Merger With Time Warner

Danny Woods
June 14, 2018

This follows yesterday's US court approval of the merger of AT&T and Time Warner, which was widely expected to lead Comcast to make a new bid for Fox and, in the long-term, set the stage for broader consolidation between ISPs and media companies.

That decision had widely been interpreted as a signal that Comcast would make a play for Fox, which is now negotiating a merger with Walt Disney.

It's possible, if the proposed Disney-Fox merger goes through as outlined. "Consistent with the terms of this agreement and the fiduciary duties of the Company's directors, 21st Century Fox's Board, in consultation with its outside legal counsel and financial advisors, will carefully review and consider the Comcast proposal". Numerous company's assets were long thought to be acquired by Disney, but as promised, Comcast has now officially swooped in with a superior offer to acquire Fox's film studio, most of its TV channels, and more.

The first of those is that AT&T will be able to complete its merger with Time Warner with no conditions whatsoever. While the Department of Justice could still appeal, Comcast seems to believe the gateway is open and chose to go in with a heavy hand in regards to 21st Century Fox.

Comcast has made an all-cash offer of roughly $65 billion to acquire Fox's assets.

Comcast owns NBC Universal and rivals Disney as a media behemoth.

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The all-cash offer is about 19% higher than Disney's $52.4bn offer, Comcast said, and is likely to spark a bidding war with Disney that could last months. Marvel would get back the characters previously licensed to Fox, reuniting X-Men with the Avengers.

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties. But looking beyond today, the merger could have a strong effect on future deals.

But the smaller deals don't make up for DirecTV and T-Mobile.

When a federal judge rejected the Justice Department's suit against the Time Warner deal, it was seen as an endorsement of so-called vertical mergers - combinations that include both media distribution and the programming itself. To further sweeten the deal, Comcast plans to reimburse the $US1.5 billion fee that it would have to pay Disney to break up that deal.

Disney and Fox stockholders will vote on the deal at special meetings on July 10.

"We believe AT&T's strategy to segment its video products (away from just the big bundle, and into four different linear/streaming-based tiers) is a very practical one that could open the door to new potential customers", said Deutsche Bank analyst Matthew Niknam in a research note.

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