Trump’s election could kill the AT&T-Time Warner deal — and investors are spooked

Time Warner stock dipped 2% on Wednesday, with investors likely spooked that Donald Trump, the presumptive next president of the US, could move to block its $85 million acquisition by AT&T.

When the deal was announced in October, Trump came out swinging against it, and vowed not to allow it through.

“In an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN — a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” Trump said the day that the AT&T-Time Warner news came out.

He also said he would break up the Comcast-NBCUniversal merger for similar reasons.

Trump’s words, however, may not translate into action.

“A Trump administration will be a wildcard for antitrust enforcement,” Gene Kimmelman, head of policy group Public Knowledge, and a former antitrust official himself, told Bloomberg. “Trump certainly railed against consolidation during the campaign, but we don’t know what kind of enforcers he’ll select to steer competition policy.”

AT&T CFO John Stephens said Wednesday, at a conference, that he was looking forward to working with Trump and “optimistic” regulators would approve the Time Warner deal, according to Reuters.

Net neutrality

One Trump proclamation that could actually benefit AT&T is his stance against “net neutrality,” which requires all web data to be treated the same.

AT&T and other mobile carriers have been criticised for trying to manoeuvre around net neutrality through policies like “zero-rating.”

Zero-rating is when wireless carriers don’t count data used with certain streaming services against your data cap. For example, T-Mobile offers zero-rating for several popular services like Spotify, Netflix, and YouTube. AT&T is planning on having its DirecTV Now streaming TV service, which the company thinks will be its main TV product by 2020, be totally zero-rated. That means you can stream all you want without worrying about your data usage.

This sounds great for customers, but critics say it runs afoul of net neutrality. Why? Because AT&T could potentially use zero-rating to hurt its competitors unfairly.

Here’s how:

If the AT&T-Time Warner deal goes through, AT&T would still likely make Time Warner pay a fee to have its content zero-rated. But since AT&T would own Time Warner, that money would just be shifting from one division of the company to another. That could give AT&T-Time Warner an unfair advantage over other content providers like Netflix, as they would have to pay that fee out of their own pocket.

But if Trump dismantled net neutrality, that argument might all be moot. The Wall Street Journal says it would be “difficult, but not impossible” for Trump to destroy the FCC’s 2015 net neutrality rules.

Additional reporting by Steve Kovach.

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