Time Warner, which has agreed to be acquired by telecom giant AT&T in an $85.4 billion deal, expects the deal to provide drive “long-term value into the future,” chairman and CEO Jeff Bewkes said on Wednesday.
He made the comments on a conference call with analysts after the conglomerate reported its third-quarter earnings that also included various other questions about the mega-deal, which Wall Street has given a mixed reaction. Some media investors and analysts suggested it could run into regulatory hurdles and not bring all the benefits promised. Jefferies analyst John Janedis wrote in a report: “The deal will receive intense regulatory scrutiny.”
Bewkes on Wednesday again touted the “enormous” opportunities of the deal for innovation and the launch of new products, services and content types. He also reiterated that he and the heads of Time Warner’s three divisions, Warner Bros., HBO and Turner, are scheduled to remain with the company once the deal closes.
“I’m not going anywhere,” Bewkes reiterated past comments, saying he would be staying for “quite a period of transition” after the deal closes.
“Most of creative input comes from outside the company,” from creatives partnering with company executives, Bewkes also said amid a question about how HBO and other units will maintain their reputation for content excellence. “That’s the essence of Time Warner.”
Asked how Time Warner’s 10 percent Hulu stake would be affected by the stake, he said he expected “no change,” saying it is a passive stake and adding that “I don’t think the merger changes anything.”
But Bewkes said one effect of the deal on the digital space would be that it would add a competitor for Google and Facebook, which he said dominate digital advertising.
The regulatory review of the AT&T deal was also a topic of debate. General counsel Paul Cappuccio said, when asked, that Time Warner has one broadcast license and a number of operating licenses and is currently “looking into [which], if any,” need to be transferred to AT&T. If there is such a transfer, the FCC would review the deal. If the company transfers to AT&T licenses allowing it to use public airwaves, which are FCC-regulated, the agency would be involved in the deal review in addition to the Justice Department, which checks for antitrust issues.
“There aren’t material licenses that are the bedrock of our business that AT&T would need,” suggested Cappuccio. Some observers have suggested TW could also sell licenses if they are not needed by AT&T but would draw an FCC review.
And Bewkes said the expectation remains that the deal would be completed by the end of 2017, if not earlier.
Asked if Time Warner had held talks with other potential buyers, Bewkes declined to address the issue and said he wants to instead focus on the transaction at hand.
Meanwhile, TW CFO Howard Averill said on the call that Warner Bros. was on track for a possible new record full-year adjusted operated income before depreciation and amortization.
And management said that the company’s consumer products business was having a record year. “This business can be an important growth driver going forward,” Bewkes said.