In spite of President-elect Donald Trump’s comments that he would block the proposed AT&T-Time Warner merger, AT&T and a handful of analysts still think the transaction stands a good chance of being approved.
According to The Wall Street Journal, AT&T executives are changing their tactical approach to gaining regulatory approval since they anticipated Hillary Clinton would win the presidential election. But AT&T still seems confident that the deal can be approved amid Trump’s administration and one unnamed AT&T consultant went so far as to call Trump’s pledge during the campaign that he would block the transaction a “throwaway comment.”
While Time Warner wouldn’t comment for the report, AT&T CEO Randall Stephenson sounded optimistic that it could sell Trump on the benefits of the $85 billion merger.
“We support president-elect Trump’s agenda of economic growth, investment in infrastructure and rational regulation,” Stephenson said, according to the Journal. “We look forward to presenting how our Time Warner transaction supports that agenda for the benefit of consumers.”
Analysts are also seeing a steady path toward approval for the deal. MoffettNathanson analyst Craig Moffett, whose firm previously interviewed numerous telecom policy experts to get a feel for the transaction’s chances, said that Trump’s election will likely improve the probability of a regulatory sign-off.
“The rules for estimating the probability of approval have changed as well. A few weeks ago, we assigned a ‘coin flip’ probability to approval of the acquisition. An extensive survey of Washington experts got us no closer to an answer; they, too, reached a consensus of 50/50 odds. Those odds now look too low. We are raising our estimated probability of approval to between 60 and 65 percent, from 50 percent previously, with the expectation that the FCC is now likely to decline to review the transaction, leaving it solely to the DoJ,” Moffett wrote in a research note.
The question of an FCC public interest review has been looming over the deal in the early days. Time Warner holds numerous licenses from the FCC, which has led to speculation that the commission would get involved. But AT&T might be able to dodge the FCC if Time Warner divests interests including its sole broadcast channel in Atlanta.
Bernstein analyst Todd Juenger also found general sentiments trending toward optimism regarding approval after conducting a survey.
“However, comparing our pre/post buy-side surveys, post-election respondents were slightly more bullish on deal approval (88% vs. 84%), with slightly less onerous conditions ('minimal' increased from 5% to 11%/'severe' decreased from 14% to 7%), on a slightly faster timeline (from ~50% 'later than Q417 or never' to 41%),” wrote Juenger in a research note.