39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Yesterday, 6:35 PM
- Prepaid wireless firm Cricket (NYSE:T) is throwing a bone to customers at its most popular plan tier, boosting the data allotment to 8 GB from a previous 5 GB.
- The mid-sized plan comes at $50/month and includes talk, text and that high-speed data.
- The 5 GB plan was comfortably ensconced between Cricket's $40/month plan (2.5 GB of high-speed data) and $60/month plan (10 GB) -- so it's too early to tell whether more plan-switchers might be enticed up to $50 rather than down from $60.
- It also offers a low-end $30/month plan (1 GB) and a $70/month unlimited plan.
Yesterday, 3:20 PM
- The Senate's antitrust subcommittee has set a hearing on the proposed AT&T (T +0.5%) buyout of Time Warner (TWX -0.8%) for Dec. 7.
- CEOs for the companies -- Randall Stephenson for AT&T, Jeff Bewkes for Time Warner -- are set to testify at the hearing.
- Updated: Bewkes will be the one to testify, though the subcommittee invited Rob Marcus, former chief of Time Warner Cable, instead -- as even the Senate can't tell apart Time Warner from TWC, the cable company that separated from TWX in 2009 and was sold to Charter earlier this year.
Yesterday, 2:02 PM
- The FCC split on party lines again today in adopting tough new privacy regulations on broadband Internet providers, rules that require an opt-in before sharing most customer data.
- That could present a problem growing advertising for big providers including Comcast (NASDAQ:CMCSA), Charter (NASDAQ:CHTR), AT&T (NYSE:T) and Verizon (NYSE:VZ).
- The vote passed 3-2 with strong dissents from the panel's two Republican commissioners. More public information (names, addresses) will be treated leniently, but providers will need to ask permission before sharing more sensitive data (like phone-tracked location, or sites visited and apps used).
- The new rules, while scaled back, have drawn heavy criticism from cable/telecom and advertising sectors, with companies that fret that the move will restructure the Internet's free-content approach.
- Other players: OTCPK:ATCEY, FTR, CTL, WIN, S, TMUS, CCOI
Wed, Oct. 26, 7:04 PM
- Those staring into tea leaves for a read on the likely approval of AT&T's (T -0.8%) deal for Time Warner (TWX +1.7%) would do well to heed the take of presidential candidate Hillary Clinton, who says the transaction calls for study.
- "I think it raises questions and concerns, and they should be looked into," Clinton said on her campaign plane about the blockbuster deal. "If I'm fortunate enough to be president, I will expect the government to conduct a very thorough analysis before making a decision."
- Meanwhile, according to what (currently anonymous) media execs are telling Reuters, media companies will press regulators to make AT&T/Time Warner divulge a mountain of customer data to blunt any potential unfair advantage in targeted ad sales.
- The combination would give the two possibly unprecedented viewing data about its customers. But there's no precedent for data access issues in an antitrust review, so rivals are pressing a tough case.
- AT&T chief Randall Stephenson had acknowledged not only that data was a deal driver but that other providers might get access -- "To the extent that it keeps their content costs down, we'd be open to it," he said -- which suggests a happy medium could be reached for some price.
- Previously: Report: AT&T making millions off trading sensitive user info to law (Oct. 26 2016)
- Previous AT&T/Time Warner coverage
Wed, Oct. 26, 12:05 AM
- Yahoo's been in crosshairs over a purported program made at the behest of government intelligence to spy on its users -- and now AT&T (NYSE:T) is being linked to creating a program to sell vital user information to law enforcement agencies for millions (of taxpayer dollars), according to a report in The Daily Beast.
- As with Yahoo, the AT&T report comes on the heels of critical M&A activity, as the telecom giant works to engulf Time Warner (NYSE:TWX) and become a media powerhouse.
- The telecom created a program called "Project Hemisphere" that warrantlessly bundles information on users, including their locations, and sells them to various agencies, the report says: “No warrant is required to make use of the company’s massive trove of data, according to AT&T documents, only a promise from law enforcement to not disclose Hemisphere if an investigation using it becomes public."
- The Daily Beast reported from AT&T's own documentation on the program, the article says.
- The nine-year-old program is used in 28 Drug Enforcement Agency centers, the report says, though law enforcement is insulated from the data, which is accessed by AT&T employees.
Tue, Oct. 25, 5:03 PM
- AT&T (T -0.4%) has revealed its "aggressive" price plan for new streaming service DirecTV Now: $35/month.
- Since AT&T is zero-rating data for its customers, that's the total price for the company's subscribers. Other customers will need to consider data needs if they're video-hungry.
- That gets users 100-plus premium channels for less than the typical cable bundle, and less than PlayStation Vue (SNE -0.9%), but in the ballpark of Sling TV (DISH +0.3%).
- CEO Randall Stephenson says the company aims to keep the price down through new advertising models.
- AT&T/Time Warner deal coverage
Tue, Oct. 25, 4:01 AM
- Netflix (NASDAQ:NFLX) CEO Reed Hastings is in favor of AT&T's (NYSE:T) planned $85.4B acquisition of Time Warner (NYSE:TWX), provided that HBO doesn't receive "an unfair advantage" and his media company continued to be treated fairly.
- "The key thing is net neutrality, which has not been AT&T's favorite topic," he declared at last night's WSJ.D Live conference.
- Looking to the next 10 to 15 years, Hastings said Netflix would continue to focus on movies and TV shows, and "no sports, no news."
Mon, Oct. 24, 6:45 PM
- Along with Moody's decision to put AT&T's (T -1.7%) credit ratings on review for possible downgrade, S&P Global Ratings and Fitch have come in with their own reviews of credit effects from the megadeal to acquire Time Warner (TWX -3.1%).
- S&P has put its AT&T ratings -- including a BBB+ corporate credit rating and BBB+ senior unsecured debt rating -- on T)+on+CreditWatch+Negative+Following+Move+to+Acquire+Time+Warner/12159691.html" target="_blank">CreditWatch with negative implications. Like Moody's, it expects any potential downgrade could be limited to one notch (keeping AT&T in investment grade status).
- The firm says the deal has "some strategic merits" and it will resolve its review once it's assessed the impact, including a "commitment to debt reduction, our view of the combined business, and its ability to grow EBITDA and improve FOCF generation."
- Fitch put its ratings for AT&T (A- long term) on Rating Watch Negative. The deal gives AT&T a "strong foothold" in media but "as proposed, is likely to lead to a one-notch downgrade." Fitch affirmed Time Warner's BBB+ rating.
- After hours: T +0.1%; TWX +0.1%.
Mon, Oct. 24, 4:43 PM
- U.S. regulators will make their own decisions about whether they'll give a formal review to AT&T's (T -1.7%) deal to acquire Time Warner (TWX -3.1%), the White House says.
- Speaking to reporters aboard Air Force One, administration spokesman Josh Earnest says that deciding to review the deal will be up to personnel at the Justice Dept. and the Federal Trade Commission.
- "Certainly when you consider the size of the deal ... I don't think anybody would be surprised if they announced a review," Earnest says. "The president would hope and expect that regulators would carefully consider the potential impact of this deal on consumers."
- Previous AT&T/Time Warner coverage
Mon, Oct. 24, 12:38 PM
- Moody's has put AT&T (T -1.5%) credit ratings on a review for possible downgrade after absorbing the impact of the carrier's $85B deal to acquire Time Warner.
- That comes as media investors swallow the idea that AT&T could pass $170B in debt after closing the deal, with average annual maturities of $9B starting in 2018.
- The ratings firm expects any such move on AT&T's senior unsecured rating (currently Baa1) to be limited to one notch, though.
- It will focus on pro forma capital structure, and whether AT&T is willing and able to bring leverage back down to around 3x. (Moody's adds its standard 0.7x to reported leverage to estimate gross leverage at AT&T will rise to about 3.5x).
- Earlier AT&T/Time Warner coverage
Mon, Oct. 24, 9:40 AM
- "The convergence in ... media and distribution is fast," says AT&T (T -1.9%) chief Randall Stephenson on a call (still ongoing) addressing the company's $85B deal for Time Warner (TWX -2.8%). "We want to be at the front of it; we don't want to be chasing it."
- The blockbuster deal gets the telecom giant some of today's best-known media brands via Warner Bros., Turner Broadcasting and HBO, but Stephenson singled out three keys: Superman, Game of Thrones and CNN.
- "When Jeff [Bewkes, Time Warner CEO] and I met and both gained conviction about the art of the possible," Stephenson says, "you don't sit around and wait on perfect timing" for deals like this. Given the potential for leaks, "you go ahead and get them done."
- Execs on the call were firm about the deal's chances with regulators. All the deals that have been in trouble over the past few years were horizontal, Stephenson says, with a competitor being taken out of the marketplace: "Jeff's company is a supplier to AT&T."
- The company line is that the legacy separation between content and distribution is getting in consumers' way, and the deal will provide downward pressure on consumer prices and upward pressure on choice. But TWX is trading at a deep discount to the deal so far this morning, likely on regulatory worries.
- Bewkes set straight notions that he'd be leaving the organization ("I'll be staying" for years) and Time Warner will be a wholly owned subsidiary of AT&T and will stay largely the same, says Stephenson. "I've never run a movie studio before," he adds.
- AT&T CFO John Stephens says the cash portion of the half-stock deal is fully funded, with a $40B bridge loan combined with AT&T liquidity. The company likes the debt outlook despite the size of the deal: a net debt/EBITDA of "2.5 range" by end of the first year, approaching the range of 1.8 by the end of year four, and a $1B run-rate synergy by the end of year three. Free cash flow is expected to be accretive in year one, as with EPS.
Mon, Oct. 24, 5:38 AM
- Next up for the blockbuster $85.4B deal for AT&T (NYSE:T) to buy Time Warner (NYSE:TWX) is navigating the political landscape given what are certain to be objections by lawmakers and media/telecom rivals.
- Before the deal was even officially announced, Donald Trump was on the tape saying he would block it, while Clinton running mate Tim Kaine voiced his concerns a few hours later.
- Comcast's purchase of NBC Universal made it through in 2011, but not until after 13 months of review, and some have complained that conditions of the approval - such as its requirement to not weigh in on big decisions at Hulu - were tough to monitor and enforce.
- No stranger to making its way around D.C., AT&T is no doubt stealing itself for what lay ahead, but CEO Randall Stephenson on a Saturday night conference call played down regulatory concerns, arguing this deal isn't increasing industry concentration as it combines a content provider with a content distributor.
Sun, Oct. 23, 11:09 AM
Sun, Oct. 23, 10:24 AM
Sun, Oct. 23, 10:10 AM
- "Premium content always wins," says AT&T (NYSE:T) CEO Randall Stephenson, who will head the combined company. "It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen." Should the deal go through, the owner of DirecTV would add networks like HBO, TNT, and CNN, along with Warner Bros. film and TV studio to its stable.
- Time Warner (NYSE:TWX) CEO Jeff Bewkes will stay on for an interim period of time to help with the transition.
- The deal is expected to be accretive in year one to T's adjusted EPS and free cash flow, and improve the dividend coverage. The company sees $1B in annual run rate cost synergies within three years of closing.
- Terms: Time Warner owners will receive $107.50 per share comprised of $53.75 of cash and $53.75 in AT&T stock. A collar is involved, meaning TWX shareholders get 1.437 shares of AT&T should its average stock price be below $37.411 at closing, and 1.3 shares of AT&T should it be above $41.349 (Friday's close for T was $37.49, and for TWX $89.48).
- The cash portion of the deal will be funded with cash and new debt. By the end of year one after closing, AT&T expects net debt to adjusted EBITDA to be in the 2.5x range.
- Speaking on a conference call last night, Stephenson played down any regulatory concerns with the argument that AT&T isn't eliminating a competitor, but rather is buying a supplier - the sort of merger typically not blocked by D.C.
- Alongside the merger announcement, AT&T also reported its Q3, with adjusted EPS of $0.74 missing estimates by a penny. The earnings call is set for Monday at 8:30 ET.
Sat, Oct. 22, 2:39 PM
- According to various media reports, AT&T (NYSE:T) has its deal to buy Time Warner (NYSE:TWX) for more than $80B, the biggest media takeover in years.
- That will come between $105 and $110 a share for Time Warner, and could be announced officially tonight.
- Attention now turns to regulatory questions. Is the deal essentially the same as Comcast's 2011 deal to acquire NBCUniversal?
- A small station ownership issue means the FCC will have a say as well.