U.S. District Judge Richard Leon ruled Tuesday that AT&T could buy Time Warner with no conditions attached, denying a Justice Department antitrust challenge to the deal.
As a result of the ruling, Wall Street analysts are questioning whether Disney will be able to close its announced acquisition deal of assets from 21st Century Fox due to the seemingly more lenient regulatory environment for mergers.
Disney’s stock is up 2.5 percent Wednesday after opening lower at the beginning the day’s session, while Comcast shares are down 0.7 percent. Traders bid the stock higher on the hopes they won’t shell out the cash for Fox.
“As we had expected, Judge Leon ruled yesterday that the AT&T … acquisition of Time Warner can proceed, with no conditions. We now expect the deal to close next week,” Cowen analyst Doug Creutz said in a note to clients Wednesday. “We also expect this means that Comcast will proceed with a bid for a large portion of FOX’s assets, putting the current deal with DIS into question.”
In December, Disney announced a deal to acquire many parts of 21st Century Fox for $52.4 billion in stock.
One Wall Street analyst even offered the possibility of Comcast and Disney dividing up Fox’s assets.
“We would expect Disney to at least match Comcast by adding cash, and Comcast to appease Murdoch’s tax concerns by offering stock, and some back and forth raising the deal bid,” B. Riley analyst Barton Crockett said in a note to clients Wednesday. “Barring a third entrant (Internet/tech is possible), we would see the most sensible outcome as splitting the baby, with Comcast getting Sky (which we see as its main goal) and Disney getting most of the rest.”
Disclosure: CNBC is owned by Comcast’s NBCUniversal unit.
Disney shares turnaround and rally amid growing doubts about its deal for Fox