Stephenson: Comcast-Disney-Fox Will Face Greater Scrutiny

AT&T chief tells CNBC deal has a ‘interesting road ahead’
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AT&T chairman and CEO Randall Stephenson, a day after closing its $108.7 billion merger with Time Warner, stopped by CNBC’s Squawk Box Friday morning, adding that the coming battle for Fox assets between Comcast and the Walt Disney Co., may not have the same luck with regulators.

AT&T, after a 20-month journey, finally closed its merger with Time Warner on Thursday night. The purchase will give the telco access to top-tier content, which it plans to package in innovative offerings like its planned AT&T Watch product.

Stephenson said there will be more on the AT&T Watch product next week, and he added that there also could be smaller tuck-in acquisitions in the company’s future as it goes forward with its entertainment strategy. 

“Those are the kinds of things we are going to bring to market,” Stephenson said, adding that they will be ad-supported and recent hire, former Group M executive Brian Lesser, who heads up a new advertising and analytics business, will help develop a “significant” ad platform. “You should expect some smaller, not like time warner, but some smaller M&A in the coming weeks to demonstrate our commitment to that.”

Related: AT&T-Time Warner Cleared to Merge 

While Stephenson answered the typical “how does it feel” questions – not surprisingly he said it feels pretty good – but sidestepped inquiries about his feelings about the ongoing Comcast-Disney-Fox deal, adding he believes it may not have the same luck with regulators.

Related: Comcast Makes All-Cash Bid for Fox Assets 

“I’m not going to say anything publicly because if I say I think the deal makes sense and ought to be approved, people are going to say, ‘See, it’s anti-competitive,’” Stephenson said on the show, according to a transcript. “And if I say it should be killed, they will say, ‘Well, then it’s a deal that ought to be done.’ So I’m going to remain quiet as it relates to what our views of it are. We’re not going to engage in terms of either advocating or contesting the deal. I think they have an interesting road ahead of them in terms of the approval process. I wish them Godspeed.”

Related: Disney Pulls Fox Trigger 

Stephenson added that because the Fox deal would be a horizontal merger – a competitor would be taken out of the industry (Fox), it will get “just an extra level of scrutiny because of that.”

The AT&T chief said he was relieved that the approval process was finally over and that AT&T can now focus on integration and execution. But he did say the lengthy process did teach him a few things.

“I’ve learned a lot about our legal system in the last six to seven months, grinding through this and so forth,” Stephenson said. “When you get into this process, the facts and circumstances about a particular deal is what matters. And on this particular case, AT&T and Time Warner, it was the facts and circumstances surrounding our deal that were evaluated and were adjudicated so I don’t know how transferable a lot of this is to the next deal. That will be up to the Department of Justice and those companies to sort out. But this one was very specific and the process was specific to our situation.”

Stephenson added that he wasn’t sure whether Disney or Comcast would ultimately win the Fox assets, but he said both have their reasons for wanting more content.

“I think they both have very logical reasons for wanting to own this business,” Stephenson said. They’re not much different than ours. I mean, what do you want? You want extensive premium content. You want extensive direct to consumer relationships. And in a Comcast situation, they want international capabilities. With Latin America, we have the largest pay TV business in Latin America. So pairing Time Warner with that and giving ourselves great international capabilities is great. So I’m kind of ambivalent as to which way it goes. …We’re going to run our play, and I think what they’re doing and what they’re pursuing just reinforces a play we’re running. We think we’re on the right path and we want to get there first. So I’ll let them go fight their own legal battles and let them fight to get the prize for Fox. We’re going to go execute our play.”

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