For its part, AT&T’s stock was down nearly 2% to $36.80.
Analysts are worried on two fronts: First, that federal regulatory concerns will make it a tough go for the merger to be completed. Second, that vertical media integration itself has had difficult times in working well.
Although AT&T claims it competes in virtually no areas where Time Warner operates, federal agencies may believe that media vertical integration -- that of the biggest pay TV provider in the U.S., AT&T’s DirecTV, and a big TV-movie content producer, Time Warner -- isn’t a good deal for consumers.
Vertical media integration has had a rough history -- even considering the lone positive deal recently, Comcast Corp.'s acquisition of NBCUniversal. However, one of the biggest failures -- in business history -- came in 2001, where then big Internet provider AOL merged with Time Warner, a deal priced at $164 billion.
Initially, Barton Crockett, media analyst of FBR & Co., says cost savings are only $1 billion -- 2% of the companies combined cash flow.
Another outside reason for troubles for the deal: A new possible bidder, which is why AT&T rushed to complete it over a weekend -- just two weeks before the presidential election. Donald Trump, for example, has already said he is against the merger; Hillary Clinton will generally be tougher on mergers overall.
Still, favoring this merger could be the singular weaknesses of different media companies. That could mean other possible big media deals.
Kannan Venkateshwar, media analyst of Barclays Capital, writes: “In the case of Comcast, the missing capability is wireless, in the case of AT&T, the missing capability is likely content, while in the case of Disney, the missing capability is technology.”