AT&T "Very Confident" on DOJ Appeal of Time Warner Deal Ruling, Says CFO

Time Warner and ATT&T Split-Getty-H 2018
Andrew Burton/Getty Images; Ben Hider/Getty Images

John Stephens spoke at the Morgan Stanley European Technology, Media & Telecom Conference in Barcelona, Spain.

AT&T is "very confident" that it will prevail in the Justice Department's appeal of a ruling that allowed the telecom giant to complete its acquisition of Time Warner, CFO John Stephens told the Morgan Stanley European Technology, Media & Telecom Conference in Barcelona, Spain, on Thursday.

Mentioning that he expects a ruling in the first quarter of 2019, he said: "I don’t spend a lot of time on it, neither does my boss. Our general counsel does."

Concluded the CFO: "Quite frankly, we are very confident that the decision will be upheld."

AT&T completed its $85 billion acquisition of Time Warner on June 14, and then changed the entertainment division's name to WarnerMedia, with its HBO, Turner and Warner Bros. divisions set to compete against Netflix amid cord-cutting and a turn by consumers to streaming services.

AT&T and Time Warner in September told the D.C. Circuit Court of Appeals in a brief that there was no good reason to unwind the mega-merger between the companies on antitrust grounds.

The Justice Department is pursuing the appeal after U.S. District Court Judge Richard Leon handed down his judgment in favor of AT&T. The government was unable to prevail on its contention that the mega-deal would lead to hundreds of millions of dollars more in annual consumer payments for such Turner networks as TNT, TBS and CNN.

The government is bringing to the appeals court the issue of whether Leon ignored economic logic in blessing the merger, but without any "clear error," AT&T and Time Warner say the judgment must be upheld.

Asked about suggestions that the NFL may be looking to go direct-to-consumer and could end its long-running NFL Sunday Ticket deal with AT&T's DirecTV, Stephens declined to provide any specific commentary Wednesday, but emphasized that "we have a significant distribution platform" that allows the company to touch so many customers.

Verizon CFO Matt Ellis later at the same conference said that while rival AT&T has acquired a content giant, Verizon remains focused on an alternative approach. "You see us focused on more the digital model for content," he said, citing digital media unit Oath's focus on news, entertainment, sports and finance. "You will continue to see us do some things in content, but it is going to be focused on those super channels within the Oath platform as opposed to the more traditional content."

While there is a new leadership at Oath, with Guru Gowrappan recently replacing Tim Armstrong as the CEO of the business, Ellis said there is "no major change in the strategy." He acknowledged that "obviously, we are seeing some parts of the revenue in that business not expanding the way that we thought it would," but said Verizon was "confident over time that will show up in the financial."