Bewkes: We’re Focusing on the Deal
While shareholders continued to fret about the possibility its $108.7 billion merger with AT&T might be blocked, Time Warner chairman and CEO assured analysts on an earning call Wednesday that the two companies are focused on getting the transaction done.
“Both the sides, AT&T and us, want to get this done,” Bewkes said on Time Warner’s third quarter earnings call Wednesday. “We think the combined company is going to have competition-spurring advantages and more choice. What you should focus on that AT&T and we who have made very significant the commitments to meet the conditions necessary if they are regulatory hurdles to close the deal. That’s what we’re focused on.”
AT&T and Time Warner announced their mega-deal on Oct. 23, calling it a way to bring new innovations in programming and distribution to the media business. Early on politicians and regulators expressed some concerns about the combined company’s size, and Time Warner’s stock has traded as much as 20% under the AT&T offering price of $107.50 per share since the announcement, signaling they too believe approval could be difficult.
Time Warner shares were down 33 cents (0.4%) to $87.92 each in early trading Wednesday.
Bewkes also deflected questions as to whether other companies had approached Time Warner about a possible deal, adding “Let’s focus on AT&T.”
According to CNBC anchor David Faber, Apple, which some reports have claimed could make a competing offer for the company, is not interested in a deal.
According to Faber, Apple is not considering making a bid for Time Warner now.
“What I can tell you about Apple guys, is right now, according to people familiar with its thinking, it's not interested,” Faber said according to a transcript of his show, Squawk on the Street. “Apple is not interested in buying Time Warner at present.”
Faber added that things could change, especially if Time Warner’s stock price continues to fall or it faces big hurdles from regulators.
“But anybody expecting an overbid from Apple at this point, certainly, it is not coming," Faber said. "Again, they are sort of not interested at this time. And it doesn't appear that there would be any other potential interest.”
That comes after Apple CEO Tim Cook left the door to a Time Warner bid slightly ajar on his earnings call last week, stating that the computer giant was open to acquisitions of any size.
While regulatory scrutiny is expected to be intense, Time Warner said it is looking into whether certain licenses it owns would need to be transferred to AT&T in a deal, which could determine whether the Federal Communications Commission participates in the approval process. The FCC basically regulates the transfer of broadcast licenses and owns just one – WPCH in Atlanta, which is managed by a third party. Some have speculated that Time Warner could sell the station or place it in a trust to avoid FCC scrutiny of the AT&T deal.
On the call, Time Warner general counsel Paul Cappuccio said the company was looking into the license situation.
“The FCC reviews license transfers,” Cappuccio said on the call. “If a license transfer isn’t required to AT&T, it won’t be required to AT&T. …We are currently looking at if any of them need to be or whether they’re not needed. There aren’t material licenses that are the bedrock of our business that AT&T would need to operate our business. Does AT&T need a walkie-talkie license that CNN holds to own CNN? There are others like earth stations that are a little more complicated in an analysis. We’ll do what the law requires. But we don’t have things that are material to the actual conduct of the business that AT&T would need in operating our assets.”
Bewkes also commented that TV Everywhere, the term he helped coin years ago, hasn’t worked out the way he hoped.
Bewkes said the original TV Everywhere vision was for more video on demand across all platforms, better interfaces and easier authentication. While that hasn’t been adopted as quickly as he had hoped, the AT&T deal could push the accelerator.
“This [AT&T deal] will help speed that up and make yet another platform and interface available to all networks and therefore give a national offering available to consumers,” Bewkes said. “I think it will spur everybody – other networks, other distributors – to offer more VOD and better interfaces. That’s good for everybody.”
Update: This story was updated to correct an error that WTBS was the only broadcast station owned by Time Warner. WTBS changed its call letters to WPCH in 2007.
The smarter way to stay on top of the multichannel video marketplace. Sign up below.