Cade, the antitrust watchdog of Brazil has said that AT&T’s bid to acquire Time Warner at a price of $85.4 billion may hinder competition. According to Cade officials, the acquisition should not be approved unless changes are made including sales of assets. Though the assets that should be divested were not specified, this could potentially cause a delay in approving the acquisition.
Cade had been asked by the telecommunication regulator in Brazil to conduct a review of the deal with the instructions urging for the adoption of remedies in order to avoid negatively impacting the pay television market in South America’s biggest economy. The board of Cade should have issued a final ruling by November 22 this year but an extension of 90 days to the deadline is applicable.
If the merger is approved as presented, the resulting entity will one of the largest telecommunication providers in the world owning media properties such as HBO and Warner Bros. In Brazil it would result in a television powerhouse which may find itself in violation of a law that prohibits the owning of programming content by pay-television providers. After taking over DirecTV two years ago at a price of $48.5 billion, AT&T automatically took a 93% shareholding in Sky Brasil.
While disagreeing with the opinion of Cade, AT&T argued that its acquisition of Time Warner will instead of hampering competition bring more options and benefits to consumers. A spokesperson for AT&T, Larry Solomon, said the telecommunications giant expected the deal to be closed by the end of the year.
“AT&T and Time Warner will work with Cade to clarify any issues they may have to promptly reach a final resolution on the matter,” read a statement from AT&T.
According to a document filed with regulators by AT&T, the number of Sky Brasil subscribers was 5.5 million by mid this year. According to estimates by analysts, Sky Brasil is worth around $5 billion based on the valuations of other providers of pay television.
So far AT&T’s planned acquisition of Time Warner has received the approval of regulators in 16 countries. The only countries where the telecommunications giant is yet to get an approval is in Chile and the United States besides Brazil. Talks between representatives of AT&T and antitrust officials in the United States began last month and this has mostly revolved around the conditions that would have to be met in order for the deal to be approved.