Time Warner Deal Close Timing "Uncertain" as DOJ Talks Continue, AT&T CFO Says

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"I can't comment on those discussions," John Stephens told a Wells Fargo investor conference in New York, but reiterated the telecom giant's expectation that the transaction would get approved.

The closing time for AT&T's planned $85.4 billion acquisition of Time Warner is "now uncertain" as negotiations with antitrust officials at the Department of Justice continue, AT&T CFO John Stephens said Wednesday.

Speaking at the Wells Fargo Media & Telecom Conference in New York in a session that was webcast, the exec said "we are in active discussions with the DOJ, those are continuing on. I can't comment on those discussions." Stephens added: "But with those discussions, I can now say that the timing of the closing of the deal is now uncertain." 

He didn't signal how big a possible delay could be, but one media investor said he took Stephens' comments to mean that the close could get pushed into early  2018. AT&T and Time Warner have previously said they expect the mega-deal to close by year's end.

Many observers had assumed the 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.

With the DOJ continuing to review the mega-deal, the two companies recently extended their transaction agreement "for a short period of time to facilitate obtaining final regulatory approval" without providing any detailed timing guidance. 

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 last week 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. Stephens' comments on Wednesday seemed to confirm those reports' suggestion that the DOJ and AT&T weren't near an agreement about conditions.

The AT&T CFO reiterated that the U.S. hasn't blocked a vertical merger like this "in over 40 years," that the transaction won't do away with any AT&T competitors and that there would be benefits for customers. 

Stephens once again emphasized that AT&T plans to run Time Warner "as a separate subsidiary" and said it was excited given "how well they are doing." Together, the merged businesses will be able to do more than as separate companies, he also said, adding, "We believe we can create something really special." 

"When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios," AT&T said previously. "For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception."

If and when the merger 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.

Stephens reiterated on Wednesday that the DirecTV Now streaming service platform is "working very well," but it will be enhanced over time with added cloud DVR, data insights and advertising services.

AT&T recently reported it lost 89,000 video subscribers in the third quarter, citing cord-cutting and recent hurricanes. The company said that it gained almost 300,000 subscribers at its DirecTV Now video streaming service, bringing its total user base to about 800,000, while it lost 385,000 traditional pay TV customers. The company ended the third quarter with 25.1 million overall subscribers.

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