Time Warner Stock Drops on Report Justice Department Weighing Legal Challenge of AT&T Deal
"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," said AT&T.
Time Warner shares fell 4 percent Thursday on a report that the Department of Justice was considering an antitrust lawsuit against the planned AT&T acquisition of the entertainment conglomerate.
Stock in Time Warner ended down $3.64 to $94.75 on Thursday. AT&T's stock was down 1 percent, or 38 cents, to $33.17.
Dow Jones and The Wall Street Journal in a report said that AT&T officials have met with the Department of Justice in recent weeks, and the department was considering a lawsuit to challenge the deal, as well as holding settlement talks that could lead to deal approval with conditions. The two sides in the talks aren't close to reaching an agreement, the report said.
AT&T reached an agreement to acquire Time Warner for $85.4 billion late last year.
"When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios," an AT&T representative said in a statement. "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."
Time Warner didn't immediately comment. If and when the merger is completed, AT&T's top entertainment executive, John Stankey, is expected to run Time Warner, giving him control of CNN, HBO, Turner Broadcasting and the Warner Bros. television and film studio.
"According to our DC sources, these headlines may be more about increasing the department's leverage in negotiating conditions than a serious intent to try and sue to block the deal," Wells Fargo analyst Jennifer Fritsche said Thursday.
"We still think the deal gets approved with conditions. Today's story feels to us like DOJ negotiating," echoed Paul Gallant of Cowen Research.