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AT&T remains in discussions with the Justice Department about the telecom giant’s planned $85.4 billion acquisition of Time Warner and is still confident it will be able to seal the deal, AT&T CFO John Stephens said Thursday at a Morgan Stanley investor conference in Barcelona.
The company also disclosed that its DirecTV Now streaming service, launched last November, has reached more than 900,000 subscribers. “About half of these subscribers are cord-cutters or cord-nevers, with about 10 percent of those coming from AT&T’s DirecTV and U-verse services,” the company said. “The other half have migrated from other traditional TV providers.”
During Stephens’ Barcelona appearance, the first question posed to him was about the planned Time Warner takeover and its outlook. “We are in discussions with the DOJ,” Stephens said in repeating past comments when asked about the latest on the deal, adding that he wouldn’t disclose details about the talks and reiterating a comment from last week that, “as of this time, the timing of the close is uncertain.”
But the exec also said, “We continue to believe that the transaction will close,” and added, “If you look at the antitrust history, the facts, law, the economics, [that leads to] the conclusion that we will be able to close.”
Last week, Stephens had told a conference in New York that the closing date of the deal was “now uncertain” as negotiations with antitrust officials at the DOJ continue. AT&T and Time Warner had previously said they expected the mega-deal to close by year’s end.
Later that day, reports said that the talks had hit a major snag, with regulators requiring the sale of CNN or the whole Turner cable networks unit of Time Warner or AT&T’s DirecTV.
A day later, AT&T chairman and CEO Randall Stephenson said it would make no sense for him to sell CNN as a condition of getting the takeover of Time Warner approved. “Irrespective of what you read yesterday, I have never been told that the price of getting the deal done is CNN,” he said. “Period. And, likewise, I have never offered to sell CNN.” The CEO also said that “from an antitrust perspective, it’s illogical for me to think this deal doesn’t get approved,” adding that the two sides were at “advanced stages” of negotiations.
This week, there has been an expectation on Wall Street that the Justice Department could any day file a lawsuit to block the mega-deal.
Asked about convergence, which emerged as a key topic of the Barcelona conference, Stephens said: “We can deliver wireless, we can deliver video, we can deliver voice.” He lauded the company for combining AT&T’s DirecTV with wireless services, saying that benefits consumers who find the product appealing. “It’s adding good-quality service to our customers” and helping with subscriber retention, he said.
Many observers had assumed the Time Warner transaction would get a decision from regulators around the first week of October, but others said the delay was no surprise given that Makan Delrahim only recently took his spot as head of the DOJ’s antitrust division. Delrahim has in the past signaled that he sees no reason for the merger to be blocked. But Dow Jones and The Wall Street Journal recently reported that AT&T officials have met with the DOJ in recent weeks, with the department considering a lawsuit to challenge the deal while also holding settlement talks that could lead to deal approval with conditions.
AT&T executives have continued to reiterate that the government hasn’t blocked a vertical merger like the planned deal in over 40 years and that it won’t eliminate any of AT&T’s competitors. Stephens again made those points Thursday in Barcelona.
If the deal is completed, AT&T’s top entertainment executive, John Stankey, is expected to oversee Time Warner, giving him control of HBO, the Turner networks (including CNN) and the Warner Bros. television and film studio.
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