AT&T-Time Warner Will Close; Time Warner Is Valuable Regardless

Nov. 30, 2017 2:00 AM ETAT&T Inc. (T), TWX36 Comments
Nima Karamlou profile picture
Nima Karamlou
501 Followers

Summary

  • As many have expressed, the AT&T-Time Warner deal will close. Even with an extended court date, the DOJ's case looks much more like a personal vendetta than a legitimate antitrust case.
  • Merger arbitrage could be a realistic option for those willing to stomach the time-sensitive risk.
  • We also explore Time Warner, particularly HBO Now, and its competitive position against Netflix.

We have been hearing the constant rumbling around AT&T-Time Warner and wanted to have a say. Firstly, we think this is a done deal regardless of a DOJ suit. This court battle looks a lot more like a personal vendetta than a legitimate antitrust case. Secondly, we believe that AT&T (NYSE:T) commits to closing this deal because traditional telecom is undergoing a compression of marginal returns and needs to diversify.

We also present a thorough analysis of Time Warner (NYSE:TWX) and the prospect of upside in the standalone company. We explore Turner, HBO, and the Warner Bros studio presenting our basis for an outperform rating on the media giant.

Our report is shown below. The latest announcements of the court extension have not been included in our calculation for annualized returns. You can view the report here:

BLACKVAULT INVESTMENTS RESEARCH
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This article was written by

Nima Karamlou profile picture
501 Followers
Undergrad Econ student @ UCSB. I love writing about trends in companies, economics, and markets. My articles are in no way intending to serve as a solicitation of securities and/ or an offering of investment advice. All views expressed in my articles are solely my own.
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Disclosure: I am/we are long TWX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: We are short T and long TWX via stock and Feb 16 '18 calls.

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