What Happens If Regulators Nix AT&T-Time Warner Deal?
Other potential suitors rumored to be interested in acquiring TW, should the AT&T deal fall apart, include Wanda and Alibaba.
Republican presidential nominee Donald Trump and Sen. Bernie Sanders, a self-described Democratic socialist, finally agree on something: Regulators should prevent AT&T from buying Time Warner for about $85 billion.
Should the government nix the merger, AT&T would have to pay Time Warner $500 million. The price is a small consolation, considering the media giant's shares would likely drop 20 percent or more, unless another company swooped in with a similar offer to acquire the parent of HBO, CNN, Turner and Warner Bros.
Indeed, Wall Street might have signaled Monday its skepticism that the AT&T-Time Warner deal will pass regulatory muster when TW shares fell 3 percent to $86.74, while the half-cash, half-stock offer from AT&T is in the neighborhood of $105 per share.
With this in mind, here are some other potential suitors rumored to be interested in acquiring Time Warner should the AT&T deal fall apart:
21st Century Fox — Rupert Murdoch’s conglomerate already expressed its interest in acquiring TW, but for only $85 per share. The company, now run by Murdoch’s sons, James and Lachlan, already said it will not engage in a bidding war with AT&T, but Wall Street presumes its interest in a merger could be reignited should regulators prevent the AT&T-TW nuptials. What’s less likely, though, is that TW would be willing to accept an offer from 21st Century Fox — or any other entity — that is less than what AT&T has offered.
Wanda Group — Founder Wang Jianlin has expressed his desire to purchase multiple entertainment companies. He already paid $2.6 billion for U.S. theater chain AMC Entertainment and $3.5 billion for Legendary Entertainment, best known for co-financing movies like Godzilla, The Dark Knight and Jurassic World. Wanda also paid $1.2 billion for the Robinsons-May department store site in Beverly Hills to build some sort of compound that it says will mark its “first important step into Hollywood.” Wang also joked to a CNN reporter once that he could someday own the cable news network.
Alibaba Group — With a market cap on the New York Stock exchange of $261 billion, Alibaba, founded by Jack Ma, is one of the world’s most valuable tech companies, and it has designs on Hollywood, as well. Its subsidiary Alibaba Pictures recently took a minority stake in Steven Spielberg’s Amblin Partners, and it has a two-year history of backing Paramount movies, including Star Trek Beyond, Mission: Impossible — Rogue Nation and Teenage Mutant Ninja Turtles: Out of the Shadows. Alibaba is rumored to be interested in purchasing a stake in Paramount, in fact, should Viacom want to sell off a piece of the iconic studio, but it also has the capacity to purchase an entire conglomerate, like TW, should it decide to go that route.
Walt Disney — The conglomerate’s $150 billion market cap presumably means it could more easily swing an acquisition of TW than could 21st Century Fox, which sports a market cap of just $48 billion (and as of Monday, TW’s market cap was $67 billion). Disney would no doubt be thrilled at the prospect of lording over not only Marvel but also TW’s DC Comics, even if superhero fanatics might balk at the notion. Nevertheless, Disney CEO Bob Iger seems more comfortable with medium-sized acquisitions like Lucasfilm, Pixar and Marvel rather than absorbing another entire conglomerate.
Google, Apple or Amazon.com — The three tech/new-media giants are expanding their entertainment offerings at the margins, but Wall Street presumes at least one of them might decide to plunge right in with the acquisition of a conglomerate. In the meantime, Apple will keep tinkering with iTunes and Apple TV; Google with YouTube and, coming soon, its YouTube Unplugged skinny bundle of TV networks; and Amazon.com will keep expanding its Amazon Prime Video.