How the AT&T and Time Warner Merger Can Hurt Disney's Fox Acquisition

A U.S. District Court judge officially approved the AT&T and Time Warner merger. It's a ruling that could have major implications across the board -- and could hurt Disney's acquisition of Fox.

The AT&T/Time Warner deal is one that both the media and business worlds have been watching closely. The $85.4 billion deal was first struck back in 2016 and has hit a number of road blocks along the way, including a Justice Department lawsuit claiming that the merger would violate antitrust laws by hurting competition within the pay television industry. With the court approving the merger, that challenge disappears not just for AT&T/Time Warner, but potentially for Comcast as well.

Comcast, which already owns NBCUniversal, has been reportedly making arrangements to launch an all-cash bid for Fox. Before today's ruling, a Comcast acquisition of 21st Century Fox would have drawn the same anti-trust concerns with the argument that Comcast owning not just NBCUniversal but 21st Century Fox as well would harm competition. Now, however, the AT&T/Time Warner green light makes that barrier moot -- and Comcast is expected to hit with their all-cash bid as soon as Wednesday.

And that could be very problematic for Disney. In November, Disney agreed to buy fox for a $54.4 billion all-stock deal. However, an all-cash bid -- especially one that is unlikely to encounter regulatory issues -- could appear to be the better offer. A recent report indicated that Rupert Murdoch, who is in charge of Fox, ultimately wants to do business with the highest bidder and cash, as they say, is king.

That isn't to say that just because today's ruling may have tipped the scale in Comcast's favor that Disney is entirely down for the count, though. Late last month it was reported that Disney is preparing to fight for Fox with Disney lining up the necessary financing to make their own significant cash option to seal the deal with Fox. What a revamped Disney offer looks like could include cash on top of the existing stock bid or, alternatively, a mix of the current bid's composition to include both stock and cash.

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At this point, it's likely that there will be a bidding war with Murdoch coming out the real winner in the end.

What do you think about the AT&T and Time Warner deal going through? Let us know in the comments.