Wall Street thinks so. It knocked down Time Warner shares 4% yesterday on multiple reports that antitrust regulators were preparing to challenge the merger is court — a move that could lead to blocking the deal or loading up the merged company with conditions aimed at preventing anticompetitive conduct.
Satellite Business News — Time Warner’s shares lost almost 4% of their value Thursday, after numerous consumer media outlets reported that the Justice Department had drafted a lawsuit challenging AT&T’s purchase of Time Warner in case the government decides to attempt to block the transaction — and the two sides were not close to an agreement on possible conditions.
At one point yesterday, Time Warner’s stock dropped 6% of its value. However, knowledgeable Washington veterans cautioned not to overreact to a drafting of a possible lawsuit, with many saying the Justice Department almost always has a suit ready to file at the later stages of major merger reviews unless it appears all but certain a transaction will be approved.
Moreover, the type of scenario playing out is a familiar one, they said, especially as it relates to antitrust reviews of very high profile deals.
Satellite Business News has been reporting for months that there are some on the permanent, professional staff of the Justice Department’s Antitrust Division who have serious doubts about whether the deal should be approved and want to stop it. But those staff members are not the final decision makers on any government decision regarding an antitrust review.
That call will be made by Makan Delrahim, the newly installed head of the division, Attorney General Jeff Sessions, and, of course, President Donald Trump.
The president is an atypical wild card in this review, many noted, since he has publicly stated his opposition to AT&T buying Time Warner and has conducted an increasingly nasty campaign against Time Warner’s CNN.
It is unusual, though not unprecedented, for a president to become directly involved in a decision on an antitrust ruling. For example, many believe President Barack Obama personally decided to block Comcast’s attempt to buy Time Warner Cable in 2015.
As several noted yesterday, the staff of the antitrust division has often made its views known on a transaction review through the consumer media.
In some cases, the staff has tried to signal its opposition to a deal because it fears the political decision makers are poised to approve a transaction and the staff hopes to spark backlash to that.
In other instances, the staff has tried to provide advance warning that a deal is in trouble in order to pressure the companies involved into agreeing to more or stricter concessions in order to gain government approval.
Regardless, most said yesterday’s development was part of a script that has played out time and time again. For its part, AT&T, in a statement provided to many consumer outlets, tried to downplay the stories.
AT&T said it is “common and expected” for the parties in a review “to prepare for all possible scenarios.” AT&T reiterated that it does not see any reason why the Justice Department would try to prevent its acquisition of Time Warner. As reported, AT&T has repeatedly said it expects to close the transaction by the end of next month.
AT&T announced its plans to buy Time Warner for more than $85 billion in October of last year. AT&T has been so confident that the transaction will close that it already has re-structured its company in anticipation of owning Time Warner.
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