What Does the AT&T Lawsuit Mean for Fox?

The telecommunication and media industry is adjusting on figuring out what the Justice Department’s litigation to disapprove AT&T Inc.’s acquisition of Time Warner Inc. means for similar deals, some being transformational merger ones and some are consolidations. Additionally, Comcast already owns content from its prior acquisition of NBC Universal. So, the broadcasting giant views the acquisition of some Fox content assets as more aligned with its business lines and objectives, known as “horizontal” deal, relatively there is the vertical merger of AT&T –Time Warner deal. The opposite view is that a Comcast – Fox deal will combine a content provider and a distributor- similar to the AT&T – Time Warner deal that the Justice department is arguing is unlawful. The WSJ reported last week that Comcast was among several suitors in talks to buy Fox’s studio, such as National Geographic. Therefore, the M&A or mergers and acquisitions in the telecommunication & media sector will most likely take a little break to brainstorm on how to alleviate some of the intensely high pressure coming from high tech firms and a trend of consolidations among pay-TV distributors that has left the sector giants of media and telecommunication looking for synergies for a next transformational move.

Analysts and investors are assessing which pattern may be acceptable to antitrust officials. Some argue that the Justice department suit about vertical mergers makes it quite difficult for Comcast to purchase some of Fox key assets, such as Fox’s movie and television studios, which will enable Comcast to be a larger content producer and a distributer which regulators are concerned about. The DOJ is trying to prevent such monopoly, as it claimed one reason for currently blocking such as an AT&T-Time Warner deal is that they will have an absolute leverage that will impact and slow the growth of online video distributers. Furthermore, usually horizontal merger between two content providers faces more stringent scrutiny since it eliminates a direct competitor. If the AT&T-Time Warner deal falls apart, then Time Warner could still possibly be considered for a vertical deal with Fox, since both AT&T and 21^st Century Fox are aligned within the same nature of business, that is mass media contents and entertainment.

https://www.wsj.com/articles/what-does-the-at-t-lawsuit-mean-for-fox-1511384826