Talks between AT&T, Time Warner and US antitrust officials on potential terms attached to the $85 billion megadeal, which began late July, reached an advanced stage, with the operator’s lawyers discussing merger conditions with the Department of Justice (DoJ), The Wall Street Journal (WSJ) reported.
The progress comes despite the fact US President Donald Trump said during his election campaign he would not approve the deal “because it’s too much concentration of power in the hands of too few”. Trump has also been very critical of reporting by CNN, a Time Warner unit.
As the WSJ noted, presidents don’t give the green light to mergers directly, but have some control over decisions, partly through their appointments to key government departments.
Meetings with the DoJ’s Antitrust Division commenced despite Trump’s nomination for head of the unit, Makan Delrahim, awaiting Senate clearance of his appointment.
If he does assume the role, he is thought to be broadly in favour of the merger.
An AT&T company representative said the told WSJ the company is: “perfectly comfortable continuing this process with the Department of Justice, with or without Mr. Delrahim’s confirmation.”
Meanwhile AT&T general counsel David McAtee said “We respect the DoJ’s confidential process, which allows us to have candid conversations with the professionals at the Department…As we have stated previously, that process is on track from our perspective.”
The government reportedly wants to ensure AT&T doesn’t discriminate against channels which compete with Time Warner’s content.
For example, the government could stop AT&T from favouring HBO over other premium-TV brands in its marketing and pricing.
Lionsgate Entertainment’s premium programming service Starz previously expressed concern about such favouritism because the operator offered HBO free for a year to some subscribers after the merger was announced.
Meanwhile AT&T appears to be confident the decision will be made in its favour. It already lined up its financing for the deal, including a $20 billion bond offering, and revealed post-merger plans. In its Q2 earnings announcement, it said the deal is expected to close by year-end.
The gap between Time Warner’s share price and AT&T’s cash-and-stock offer narrowed, which shows investors believe the deal will be approved.