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Technology

Here's how the AT&T Time-Warner decision will play out for telecoms and media companies

AT&T and Time Warner will find out their collective fate Tuesday when U.S. District Court Judge Richard Leon determines if the companies can merge. While the government and AT&T could appeal, the decision will have wide-ranging effects across the U.S. telecommunications world. Here’s how the following companies could be affected:

If the deal is approved: AT&T will move quickly to complete its $85 billion deal for Time Warner. AT&T says it intends to close less than a week after a deal is approved, allowing for a short process by the appeals court to order a stay.

If the deal gets blocked: AT&T will effectively be barred from buying a large content company. It may try to buy a portion of Time Warner if it can’t acquire the entire company. AT&T could also turn its attention (and capital) to strengthening its network and preparing for next-generation wireless technology.

If the deal is approved: CEO Jeff Bewkes will transition out of his job, collecting millions on his way out as part of a change of control employment package. The Time Warner brand will go away, following last year’s extinction of Time Warner Cable.

If the deal gets blocked: Time Warner is probably going to need to find another buyer, having prepared to sell for nearly the last two years. Verizon, a company that could afford to purchase Time Warner, may not have interest. Comcast certainly would pass. Could a technology company finally step up and buy a major content player — perhaps for a discounted price?

If the deal is approved: Comcast plans to kick off a bidding war on Wednesday with Disney to buy some Twenty-First Century Fox assets, which include cable networks, 39 percent of British satellite TV provider Sky Plc and Indian media conglomerate Star if a deal is approved, according to people familiar with the matter. While there’s no guarantee a Comcast-Fox tie-up would pass regulatory approval, Comcast would feel good about its chances.

If the deal gets blocked: Barring any loophole in the ruling language, Comcast doesn’t plan to top Disney’s bid for Fox and may try to use a bidding war for Sky as leverage to extract certain assets from Disney.

If the deal is approved: Rupert Murdoch will become a wealthier man. Comcast intends to bid about $60 billion in cash, topping Disney’s $52 billion all-stock offer.

If the deal gets blocked: Fox still has Disney’s $52 billion offer in hand. Fox will proceed with getting shareholder approval for that offer. Comcast doesn’t plan to pursue a topping bid.

If the deal is approved: Disney will have to decide if it’s willing to improve its offer for Fox. Disney could decide to both raise its offer and change the mix of assets from all-cash to cash-and-stock.

If the deal gets blocked: Disney will proceed with its acquisition for Fox. While AT&T’s acquisition of Time Warner doesn’t necessarily make Disney’s deal for Fox more or less likely, a judgment against AT&T would ostensibly lessen the chances of a Fox-Disney deal from a regulatory standpoint.

If the deal is approved: CBS and Viacom have put pencils down on negotiating a merger that controlling shareholder National Amusements has been pushing for. If a deal is approved, both companies could theoretically have some other options, such as selling to Verizon, Charter, or a combined Sprint/T-Mobile, down the road.

If the deal gets blocked: Viacom may feel more pressure to merge with CBS because its options will be limited. Time Warner would again become a merger option for both companies. But the leadership of any merged company would still need to be ironed out, and that won’t be an easy process.

If the deal is approved: Theoretically, Verizon would have a clear opening to buy a large content company to compete with AT&T. This could CBS, Viacom (or a combined CBS-Viacom), Discovery or something else. But Verizon CEO Lowell McAdam told CNBC last month that buying a large pay-TV company is “not our strategy,” and the naming of successor Hans Vestberg, currently Verizon’s CTO, suggests the company is more concerned with rolling out 5G than copying AT&T.

If the deal gets blocked: Verizon shares may rise as AT&T, its largest rival, will have wasted the last 18+ months on a deal that can’t happen.

If the deal is approved: Charter will have a clear path forward to buying a content company if it wants to go down that road. Charter may also find negotiations with Time Warner a bit more challenging if the government turns out to be right, and AT&T threatens to hold back Time Warner programming if it doesn’t get higher programming fees.

If the deal gets blocked: Charter likely won’t attempt a major content acquisition and may continue to be rumored as a takeover target for Verizon or a combined Sprint-T-Mobile, if that deal is approved.

If the deal is approved: Liberty Media Chairman and Discovery shareholder John Malone has long speculated about rolling up smaller content companies and potentially combining them with a cable or wireless provider. He owns stakes in Discovery, Lionsgate and Charter, among other companies. An approved deal may push him further in the direction of mass consolidation among his assets, if not others.

If the deal gets blocked: It’s not great news for smaller content companies. Discovery CEO David Zaslav told The New York Times in March the deal’s approval is important for the survival of the current media ecosystem.

If the deal is approved: Sprint and T-Mobile, which announced plans to merge in April, will likely argue that AT&T will get even bigger and stronger as a competitor as both companies try to persuade U.S. regulators to allow a merger. Deal approval could also lead to an acquisition of a content company several years from now, although integration hurdles and capital spending on a combined company’s network would probably take precedence.

If the deal gets blocked: Sprint and T-Mobile may actually lose a debate point in their quest to get a merger approved, as AT&T won’t get larger. Still, if the companies can get a merger approved (which may be difficult), the No. 3 and No. 4 largest wireless companies could emerge as a stronger competitor to a weakened AT&T.

Disclosure: CNBC is owned by Comcast’s NBCUniversal unit.

Source: Tech CNBC
Here's how the AT&T Time-Warner decision will play out for telecoms and media companies

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