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AT&T-Time Warner deal to prevail, analysts predict

But the US government's lawsuit to block the merger sparks concerns the White House is trying to hurt Time Warner's CNN.

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AT&T-Time Warner deal to prevail, analysts predict

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Wall Street analysts believe pay TV and mobile carrier AT&T has a strong case in court against the US government over its $85 billion deal to acquire Time Warner.

The Justice Department is suing AT&T to block the deal on grounds it could hike television bills and hamper innovation.

The case will be closely watched because US President Donald Trump has been a vocal critic of Time Warner’s CNN news unit, and he opposed AT&T’s purchase of Time Warner on the campaign trail last year, saying it would concentrate too much power in AT&T’s hands.

Trump stood by his criticism of the deal on Tuesday.

“I‘m not going to get involved in litigation, but personally I’ve always felt that that was a deal that’s not a good deal for the country,” he told reporters. “I think your pricing’s going to go up,” he added.



Not direct competitors

AT&T has vowed to defend the deal. The Department of Justice’s move to block it was “foolish” because the deal posed no threat to consumers, the wireless carrier’s trial lawyer, Dan Petrocelli, told CNBC.

AT&T does not directly compete with Time Warner, but it wants to buy it so it can bundle video content on its mobile service. The US government has not blocked such a “vertical” deal in over 40 years.

The case has been assigned to Judge Richard Leon, a senior judge on the District of Columbia District Court, who was appointed by President George W. Bush in 2002.

Time Warner shares rose after Leon’s assignment was announced, as investors bet the judge would be more likely to allow the deal to proceed.