February 1, 2018
AT&T’s pending $85.4 billion acquisition of Time Warner continues to generate escalating costs for the media company.
While the deal – currently held up due to a Justice Department antitrust lawsuit – is predicated in part on fiscal synergies, Time Warner Feb. 1 reported the transaction generated $279 million in costs in fiscal 2017, including $3 million in the fourth quarter, ended Dec. 31.
Subsidiaries Turner, Warner Bros. and HBO accounted annual merger costs of $73 million, $78 million and $47 million, respectively. Time Warner corporate added another $91 million to the SG&A ledger.
The bulk of the costs are related to employee retention programs, including the issuance of 5.7 million in stock to select staff, including all senior executives at Time Warner – including CEO Jeff Bewkes and Warner Bros. CEO Kevin Tsujihara, according to a regulatory filing.
The merger – announced Oct. 16, 2016 – generated $42 million in related costs in 2016.
The fees could be moot should the merger not happen. AT&T is on the hook to Time Warner for $500 million should the government kill the deal.
While speculation suggests President Trump ordered the lawsuit due to his dislike of CNN, which he calls “fake news,” the DOJ argues the merger combining AT&T’s DirecTV with Time Warner’s TNT, HBO and CNN would form a monopoly that is detrimental to consumers and competitors.
Trial date is slated for March 19.