The Trump Train Could Derail AT&T’s $85 Billion Merger

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Robert Donachie Capitol Hill and Health Care Reporter
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AT&T made a bid to purchase Time Warner Inc. for $107.50 per share, or $85.4 billion, Oct. 22, in a move that would transform the American telephone company into one of the world’s largest media conglomerates.

The merger would be a monumental gain for AT&T, as it aims to be the first U.S. wireless company to compete on the national level with an online video package similar to traditional television pay packages. Time Warner boasts an enviable media lineup that includes: CNN, TNT, and HBO.

President-elect Donald Trump, however, could stand in the way. At a rally in Pennsylvania Oct. 22, Trump said the merger stands “as an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.” (RELATED: The Landmark, $85 Billion Dollar AT&T Merger Faces Three Major Obstacles)

AT&T chairman and CEO, Randall Stephenson, thinks highly of the deal for both the future of the company and for customers. “This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” Stephenson said in a Wednesday press release.

“Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that.  We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications,” the chief executive continued.

Trump is expected to make sweeping cuts to business regulations, which has many economists and business leaders anticipating a business friendly environment. Stock markets rallied for six consecutive days after Trump won the presidency. The Dow Jones Industrial Average rose almost 1,000 points following Election Day. (RELATED: Stocks Markets Rally For Six Consecutive Day After Trump Win)

Despite the market rally and praise from business leaders, Trump’s promise to shoot down the merger has many investors, stock traders and lobbyists concerned about how a Trump administration will handle the business community for the next four years.

This uncertainty is reflected in the stock value fluctuations of Time Warner. Since news of the potential merger broke, Time Warner stock value fluctuated wildly. The company’s shares were trading 17 percent below value Wednesday, the Wall Street

Trump’s comments about CNN’s coverage of the election also sparked concerns. Time Warner Inc. owns the news network and Trump has previously called it the “Clinton News Network.”

Some speculate Trump could be upset with AT&T because one senior official at the company and one company lobbyist publicly supported former Secretary of State Hillary Clinton’s bid for the White House.

AT&T ‘s political war chest also raises some concerns. The firm spent $209,495,644 lobbying for its interests in Washington, D.C. since 1998, according to Open Secrets. It spent $12,660,000 lobbying in 2016 alone lobbying on Telephone Utilities. That is $5 million dollars more than the next highest lobbying tech firm spent in 2016.

Trump did not comment on the merger since his original remarks. While the president-elect will not have the direct power to veto the merger, he will appoint the future attorney general and antitrust chief of the Department of Justice (DOJ). These figures would directly oversee the review of the proposed merger.

The two arms of the government charged with oversight of corporate mergers are the Federal Communications Commission (FCC) and the Antitrust Division of the DOJ. These government bodies thwarted 150 corporate mergers under President Barack Obama’s time in office, compared to 129 under former President George W. Bush. 292 under former President Bill Clinton.

The arm likely charged with reviewing the AT&T merger is the DOJ, which shot down eight deals this year, and is currently looking at three more.

Some say an FCC review of the case would bring further scrutiny than a DOJ review, as the FCC focuses on whether the deal is in the interests of the public. Others are less convinced because of the FCC commissioner’s response to the merger.

FCC commissioner Jonathan Adelstein said, “in the end, I think it probably gets done, but I don’t think it’s going to be pretty,” in an interview with CNBC. “The bottom line is it is not that strong of an anti-trust case for DOJ because it is a vertical, not a horizontal merger.”

Unlike the DOJ, the FCC has the ability to slap a lengthy review of the deal under discretion of an administrative law judge.

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