Group Created with Sketch.
Volume 25 No. 29

Media

If AT&T merges with Time Warner, it would gain NCAA Tournament rights
Photo: GETTY IMAGES

A federal judge yesterday "cleared AT&T's path toward becoming a major player in entertainment and shut down the government's attempt to block the legacy telecom's merger with Time Warner," according to a front-page piece by Repko & Benning of the DALLAS MORNING NEWS. The ruling is a "major victory" for Dallas-based AT&T, which has "waited for about 20 months to move forward with the acquisition." The merger will turn AT&T into the owner of "well-recognized TV and movie brands, in addition to distributing TV, internet and cellphone service to millions of customers." U.S. District Judge Richard Leon in a "complete rebuke" of the Justice Department's arguments "sided with AT&T and did not recommend any conditions to the deal." AT&T Senior Exec VP & General Counsel David McAtee in a statement said that the company "plans to close the deal by June 20." Repko & Benning note Time Warner "adds a missing piece to AT&T's portfolio: popular content," including Turner's "rights to the NBA playoffs games" (DALLAS MORNING NEWS, 6/13). In N.Y., Kang, Lee & Cochrane in a front-page piece write the approval of the $85.4B deal is "expected to unleash a wave of corporate takeovers" (N.Y. TIMES, 6/13).

WINNING BET: DEADLINE.com's Chmielewski, Hayes & Patten wrote the ruling also "cements the legacy" of AT&T Chair, CEO & President Randall Stephenson, who had "bet the wireless carrier's future on its ability to capitalize on the growing importance of mobile devices as screens of choice for video viewing." AT&T's stock has fallen 15% over the last two years, as "wireless and pay TV subscriptions have stagnated." The approved deal also "seemingly fortifies Time Warner in the intensifying battle with media interlopers Amazon, Google and Netflix" (DEADLINE.com, 6/12). The WALL STREET JOURNAL's Drew FitzGerald cites sources as saying that Stephenson was "unlikely to survive" in his current role if his merger strategy had "been rejected." Stephenson in less than three years has "transformed the phone company he inherited into one of the world's biggest entertainment companies." Stephenson said that he "plans to leave Time Warner's management alone to avoid rocking the boat" (WALL STREET JOURNAL, 6/13). In Dallas, Mitchell Schnurman writes for Stephenson, the merger is a "chance to create a new legacy." Although AT&T is "losing money" on OTT service DirecTV Now, the platform has "attracted almost 1.5 million subscribers in a year and a half" (DALLAS MORNING NEWS, 6/13).

SMACKDOWN FOR DOJ: The WALL STREET JOURNAL's Brent Kendall writes there is a "reason the government rarely challenges so-called vertical mergers like AT&T-Time Warner: The cases are hard to win." The AT&T trial was the "first fully litigated vertical merger case in 40 years" (WALL STREET JOURNAL, 6/13). The HOLLYWOOD REPORTER's Eriq Gardner wrote the trial itself "presented competing visions of the media industry's future." The government "argued that the AT&T/Time Warner merger would mean that consumers would have to pay hundreds of millions of dollars more for popular programming" such as the NCAA Tournament (HOLLYWOODREPORTER.com, 6/12). The WALL STREET JOURNAL's Kendall & FitzGerald in a front-page piece write yesterday's ruling marks a "historic defeat" for the Justice Department. President Trump was "unusually direct in opposing the deal, both before and after taking office, giving the case an unusual political cast." Leon said that he "hoped the Justice Department would have the 'wisdom' not to seek an emergency stay of his ruling, saying such a legal maneuver would be 'manifestly unjust' to AT&T and Time Warner" (WALL STREET JOURNAL, 6/13).

FEELING VINDICATED: AT&T's lead attorney Daniel Petrocelli said that the ruling was a "long-overdue validation." Petrocelli: "The judge's decision categorically rejects the government's bid to block this historic merger." But Petrocelli "declined to pin blame" on Trump for "purposely bringing the suit as retribution against his longtime media foe, CNN, or do any kind of a touchdown dance" (DEADLINE.com, 6/12). In N.Y., Andrew Ross Sorkin writes the DOJ's attempt to block AT&T "never made sense on the merits of the case." Now that the government has lost its case, companies across the world will be "spinning up all sorts of megadeals to pursue on their assumption" that Trump's administration "won't want to risk losing again" (N.Y. TIMES, 6/13).

OPENING THE FLOODGATES? The HOLLYWOOD REPORTER's Szalai & Bond wrote yesterday's ruling has bankers "salivating over the next mega-deal." CBS, Viacom, Lionsgate and "maybe even AMC Networks have been mentioned as possible M&A targets or buyers" (HOLLYWOODREPORTER.com, 6/12). Financial Times Global Media Editor Matthew Garrahan said “anything is up for grabs at the moment.” CNBC’s Brian Sullivan: “The whole dealmaking landscape has now just changed” ("Worldwide Exchange,” CNBC, 6/13). In Boston, Hiawatha Bray writes yesterday's decision could also "increase the likelihood" that T-Mobile will be "granted permission to acquire its rival Sprint" for $26B (BOSTON GLOBE, 6/13). The WALL STREET JOURNAL’s Shalini Ramachandran notes across the media industry, moguls are "calculating whether now is the time to exit." Liberty Media Chair John Malone, who owns stakes in Discovery, Lionsgate and Charter, has been "advocating for a roll-up of content companies for years" (WALL STREET JOURNAL, 6/13).

WELCOME TO THE NEW AGE: In L.A., James & Faughnder write the merger "could reverberate for years to come by turning the media industry into a land of fewer giants" (L.A. TIMES, 6/13). The AP's Gordon & Anderson write the merger also "highlights how corporate America wants to adapt to deal with its new environment" (AP, 6/13). Needham & Co. Managing Dir Laura Martin: “In the last 18 months, what's happened is that the budgets for Facebook and Apple and Amazon have gone from $1 billion to try to compete with film and TV to $5 billion, $8 billion. They have unlimited cash. ... All these firms must get bigger to try to compete with the Amazons and Apples of the world” (“Worldwide Exchange,” CNBC, 6/13).

Comcast is expected to offer $60B for Fox assets, including local Fox Sports networks
Photo: GETTY IMAGES

On the heels of a federal judge's decision that AT&T's $85.4B acquisition of Time Warner "should not be stopped for competitive reasons, Comcast is expected to make its bid for the 21st Century Fox film and TV studio assets" that Disney has "already agreed to buy," according to Ashley Wong of USA TODAY. Comcast was "expected to wait for the judge's ruling in the Justice Department's suit against AT&T-Time Warner before making a formal bid." The Fox assets up for grabs include a "one-third stake in Hulu" and Fox' 22 RSNs (USATODAY.com, 6/13). In Philadelphia, Bob Fernandez reports Comcast, as early as today, is "expected to offer" $60B for the Fox assets. The potential deal "would be similar to AT&T/Time Warner by combining a cable and internet businesses with TV channels, news, sports, and other entertainment" (PHILADELPHIA INQUIRER, 6/13).

THE PRICE IS RIGHT: The WALL STREET JOURNAL's Elizabeth Winkler writes the AT&T-Time Warner ruling "could also give Comcast reason to start lower" in its bidding for Fox' assets. Since the federal judge "didn’t impose so much as a single constraint on the merger, the regulatory concerns that previously hung over a Fox deal will be looking far less worrisome." But whatever Comcast offers, Disney is "sure to counterbid." Investment firm Jefferies media analyst John Janedis said that if a bidding war "takes off, and it could given Fox’s strategic importance and the capacity of both companies to stretch their balance sheets, bids could reach" up to $80B. That is the "maximum value at which the companies could maintain their investment-grade credit ratings" (WSJ.com, 6/13). Evolution Media analyst Sean Atkins said he finds it "hard to believe that Disney is going to match” a higher Comcast offer for Fox’ assets, “at least the first round what comes out.” Atkins said if the Murdoch family is “still playing a little bit for legacy” in the sale of assets, then it “gives the hand to Disney with a little bit of wiggle room.” Atkins noted Comcast “needs the assets more than Disney ... but if you’re looking at who’s going to execute the most, who has the most synergistic opportunities to really expand that portfolio over time, you have to give it to Disney” (“Squawk Box,” CNBC, 6/13).

ALL CLEAR AHEAD? In N.Y., Michael de la Merced notes Fox had "turned down Comcast last year, worried that the cable giant’s bid -- even though it was much higher than Disney’s -- could be blocked by regulators." But that concern was "lessened" with the AT&T-Time Warner ruling. The Fox assets that would "matter to antitrust regulators" are the 20th Century Fox movie and TV studios, 22 RSNs and its stake in Hulu. Comcast’s NBCU already owns nine RSNs and "would argue that the two sets of properties mostly don’t overlap." But if pressed, sources said that the company "would be willing to sell enough networks to satisfy regulators" (N.Y. TIMES, 6/13). VARIETY's Cynthia Littleton noted Comcast could point to the fact that "two-thirds of Fox’s channels are outside Comcast’s cable footprint -- which means the company will have to negotiate carriage deals" with rival Multichannel video programming distributors "just like any other content owner" (VARIETY.com, 6/12).

BATTLE ROYALE: In N.Y., Edmond Lee writes the battle for Fox' assets will pit Comcast Chair & CEO Brian Roberts against Disney Chair & CEO Bob Iger in "what could be a fierce bidding war." Meanwhile, mergers like this "will allow companies to compete for costlier rights to professional sports, seen as perhaps the only way to keep viewers from cutting the cable cord, and to build out their streaming services" (N.Y. TIMES, 6/13). The AP's Mae Anderson notes if Comcast "succeeds in outbidding Disney for Fox, a major cable distributor would control even more channels on its lineup and those of its rivals." There are "fears that it could lead to higher cable bills or hinder online alternatives" (AP,  6/13). 

Kay (l) will also continue to do his afternoon drive-time show on ESPN Radio N.Y.
Photo: MICHAEL KAY

Yankees play-by-play man Michael Kay and YES Network are "putting the finishing touches on a three-year contract with a network option for two more," and the deal "calls for a salary of more than a million dollars per season," according to Andrew Marchand of the N.Y. POST. Kay "brought in heavyweight baseball agents Casey Close and Jim Murray as his representatives" for the negotiations. While Kay will be back "doing his usual 125 or so games, there is still a chance that Ryan Ruocco could receive more time in YES’ baseball booth" when Kay is off. Kay will also "continue to do his afternoon drive-time show" on ESPN Radio N.Y. (NYPOST.com, 6/12).

Fox Sports has collaborated with Grabyo, a London-based live video production company, and graphics outfit Singular.Live to enhance the OTT delivery of this weekend’s U.S. Open. The unauthenticated live stream involving the three entities will include “Featured Tees,” a live stream through Fox Sports Go and the Fox Sports app from five holes across the course at Shinnecock Hills Golf Club. That “Featured Tees” presentation will be a more data and graphics-driven presentation than a traditional broadcast, seeking to cater to more hardcore golf fans and offering a broader range of viewing options. “This is going to be a more analytically driven form of storytelling,” said Fox Sports Senior VP/TV Everywhere Clark Pierce. “We are looking to do some new things in terms of the display of data.” The “Featured Tees” will also be a fully digital effort as opposed to a digital distribution of a linear production. Grabyo has an existing relationship with Singular.Live and the two have worked together for other entities including MLS. “This is really on the cutting edge of an OTT production in terms of the automated integration of all this live data,” said Graybo President of Americas Mike Kelley. 

In N.Y., Keith Kelly reports the auction for the four magazines that were the "beating heart of the old Time Inc. empire," including SI, is "moving toward final bids by the suitors to Meredith Corp. by July 2." The sell-off is "taking a tad longer than Meredith hoped, but the company is still expecting a hefty return despite the titles' recent ad slumps." A source said that there are now 2-3 finalists "eyeing each title" (N.Y. POST, 6/13).

MIAMI'S VICE: SPORTING NEWS' Michael McCarthy noted ESPN is "closing in on a new deal" with Dan Le Batard. Sources said that the host of "Highly Questionable" and "The Dan Le Batard Show With Stugotz" is "finalizing a long-term contract extension," but the deal is "not signed yet." Le Batard's current deal is "set to expire early this summer." Keeping him would be a "feather in the cap" for ESPN's new management team under President Jimmy Pitaro. Le Batard reportedly has "discussed moving his ESPN radio show to SiriusXM" (SPORTINGNEWS.com, 6/12).

FOUNTAIN OF YOUTH: The NATIONAL POST's Dan Barnes notes veteran TSN broadcaster Rod Smith "might be offended" about having to cede some Thursday night CFL hosting territory to the net's "younger, hipper Kate Beirness." Smith said, "They want to see if they can get a younger audience because the demographic of the CFL is largely guys my age. I'm in my 50's." The installation of the 34-year-old Beirness as host for all 11 Thursday games "represents just one step toward younger and hipper." TSN also "announced a Thursday night concert series," one for each of the nine CFL venues, "aimed at younger fans" (NATIONAL POST, 6/13).