Morningstar

Will DOJ Lawsuit Sink AT&T-Time Warner Merger?

In light of the uncertainty arising from a court case, we are lowering our expectation that the merger closes from 75% to 50% and decreasing our fair value for Time Warner.

Securities In This Article
AT&T Inc
(T)

As previously rumored, the Department of Justice filed a lawsuit to block the merger of

Management at AT&T began mounting a PR campaign against the DOJ well before the lawsuit to block the merger was filed. We expect that AT&T will continue to fight the lawsuit in the public square and will attempt to discover evidence that President Trump and/or other officials influenced the DOJ’s decision. Another argument that we expect the firm to continue to use is that this is a vertical merger, instead of a horizontal merger that would remove a competitor from the marketplace. This argument leans on recent antitrust precedents under which the DOJ has settled for smaller divestures and behavioral remedies to offset any potential future anticompetitive behavior as in the 2011 Comcast-NBCUniversal merger.

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About the Author

Neil Macker, CFA

Senior Equity Analyst
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Neil Macker, CFA, is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers media/entertainment and video game publishers.

Before joining Morningstar in 2014, Macker was a senior equity research associate for FBR & Co., where he covered the telecommunications services sector. Previously, he was an associate equity analyst for R.W. Baird and completed the summer associate rotational program at UBS Investment Bank. Before attending business school, Macker held analytical roles at Corporate Executive Board and Nextel.

Macker holds a bachelor’s degree from Carleton College, where he graduated cum laude, and a master’s degree in business administration from The Wharton School of the University of Pennsylvania. He also holds the Chartered Financial Analyst® designation.

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