Dealreporter.com believes the DOJ has AT&T’s (NYSE:T) acquisition of Time Warner (NYSE:TWX) in its cross-hairs. According to Seeking Alpha Breaking news Dealreporter.com cited two sources as saying:
“Among the potential competitive issues being studied by Justice is whether the merged company could limit access to content or disrupt rival streaming services on its network.”
If the DOJ were to put the kibosh on the acquisition this would be very bad news for the stock, in my opinion. Nevertheless, I’m not concerned in the least regarding a DOJ review. First, I’m not a huge follower of dealreporter.com. I believe you should take the report of the DOJ having the deal in their cross-hairs with a grain of salt. Especially since dealreporter.com was adamant the deal would have to pass an FCC regulatory review not so long ago. According to a recent Dealreporter.com post:
“The combined cache of spectrum licenses held by Time Warner makes it likely that the Federal Communications Commission (FCC) will be a part of the regulatory review of its sale to AT&T, three sector attorneys said.”
Well according to a recent article in the Wall Street Journal, the newly appointed FCC Chairman Ajit Pai stated he doesn’t expect agency to review AT&T’s acquisition of Time Warner. So, as you can see, things don’t always turn out like you think they will. In the following sections I will make the case the DOJ will inevitably approve the acquisition for concerned dividend and income investors.
There is precedent
Comcast is the No. 1 provider of video and residential Internet service in the United States. The company acquired a 51% stake in NBC Universal from General Electric (NYSE: GE).
DOJ regulators were quoted at the time as being concerned about many of the same points dealreporter.com raised. The DOJ was quoted as stating that an all-powerful Comcast might stifle competition from new online video competitors.
Nevertheless, the deal went through after Comcast agreed to certain conditions. The conditions included relinquishing management rights of its minority stake in Hulu. Hulu is co-owned by News Corp, Walt Disney Co and NBC Universal. It did take several months of negotiations which provided the fodder for several disparaging headlines prior to the deal being approved.
I expect……READ MORE