AT&T and Time Warner shares fall as investors' doubts over merger grow AT&T and Time Warner shares fall as investors' doubts over merger grow

https://www.theguardian.com/media/2016/oct/24/att-time-warner-merger-shares-fall-investors

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Shares in AT&T and Time Warner fell on Monday as Wall Street investors expressed concerns that political and regulatory roadblocks may thwart AT&T’s $85bn (£70bn) takeover of the Hollywood movie studio and owner of CNN and HBO.

Time Warner shares fell 2.2% to $87.50 – far below the offer price of $107.50 – as trading opened on the New York Stock Exchange on Monday. AT&T shares fell 1.5% to $36.93.

Analysts said the drop in share priceswas indicative of strong concerns that the deal, which the companies signed on Saturday night, may collapse.

The credit-rating agency Moody’s issued further concern on Monday by warning it was reviewing AT&T for a downgrade because of doubts over the merger. It said the company’s credit rating could be cut to Baa2, the second lowest investment grade.

Politicians of all hues have raised concerns about the deal, which would see one company control a vast swath of media assets and their distribution.

Donald Trump said he would “look at breaking this deal up” if he were elected president. The Republican nominee, who had fought a long-running battle with “dishonest mainstream media” during the campaign, said the deal would lead to “too much concentration of power in the hands of too few” and could “destroy democracy”.

Tim Kaine, Hillary Clinton’s vice-presidential nominee, also expressed concern about the tie-up. “I’m pro-competition. Less concentration, I think, is generally helpful, especially in the media,” he told NBC’s Meet the Press on Sunday.

Clinton’s spokesman said the Democratic presidential nominee had “a number of questions and concerns” about the deal but said that more needed to be known “before any conclusions should be reached”.

Senators Mike Lee and Amy Klobuchar, the Republican chair and ranking Democrat on the Senate antitrust subcommittee, said their committee would hold a hearing on the takeover in November. It is not clear if the hearing will be before or after the 8 November election.

“An acquisition of Time Warner by AT&T would potentially raise significant antitrust issues, which the subcommittee would carefully examine,” they said in a joint statement.

Bernie Sanders, the popular Vermont senator and Clinton’s former rival for the Democratic nomination, said the government should “kill” the deal as it would lead to higher prices and less choice for customers.

The administration should kill the Time Warner-AT&T merger. This deal would mean higher prices and fewer choices for the American people.

Sanders’ views are important because Clinton is trying to woo Sanders’ huge support base of young people and left-leaning voters to secure the presidency.

Several consumer watchdogs have also come out attacking the deal and raising concerns the takeover could lead to higher prices, reduced choice and a decrease in media plurality.

Despite the widespread concerns both in Washington and on Wall Street, Randall Stephenson, AT&T’s chief executive and the man who would lead the combined company, said on Monday he was confident that the deal would get the go-ahead from regulators before the end of 2017.

He said the deal would not fall foul of antitrust rules because the two companies do not compete in the same industry. “There are no competitors being taken out of the marketplace,” he told CNBC.

The investment bank Credit Suisse lowered its rating on Time Warner from “outperform” to “neutral”. “We believe the value of the offer is full on current earnings and cash flow; that the probability of a counter-offer from a third party is low; and that the transaction will face lengthy scrutiny from regulators,” Omar Sheikh, a Credit Suisse analyst, wrote in a report. “We now see better opportunities elsewhere in US media.”