To gain President-elect Donald Trump’s blessing for its $85.4 billion acquisition of Time Warner Inc. (TWX), telecom giant AT&T Inc. (T) could offer to spinoff cable news network CNN.

That’s according to Wells Fargo analyst Jennifer Fritzsche, who wrote in Barron’s that she expects concessions from Time Warner and AT&T to get the deal done, including a possible spinoff of CNN and continued infrastructure investment by the telecom company. “From a legal standpoint, we note that, if denied, this deal would be precedent-setting given the fact that no vertical merger in the technology, media and telecom (TMT) space has been denied,” wrote the analyst.

Vocal Opposition

When the deal between the two was announced, Trump was vocal in his opposition, saying on the campaign trail if he became president he would block it. Since winning the election, Trump has been silent on the merger but has appointed deal-friendly staffers to his transition team, giving investors, AT&T and Time Warner increased confidence the deal would win regulatory approval.

That all changed a couple of weeks ago when reports surfaced Trump and his advisers are against the deal on the basis of media concentration, with Trump telling his transition team to make the case as to why it should be blocked.

So, Yes or No?

Amid all that, AT&T Chief Executive Randall Stephenson met with Trump at Trump Towers to discuss what everyone expected to be the Time Warner deal. Instead, the talks focused on ways to increase investments in the U.S., creating more jobs in America and making American companies more competitive on a global scale. All of which left investors hanging on where it matters most: the Time Warner deal. (See also: AT&T CEO: No Merger Talk During Trump Meeting.)  

The meeting also came days after AT&T and Time Warner’s asserted in a Securities and Exchange Commission filing the Federal Communications Commission won't be part of the review process since Time Warner isn't transferring any licenses to AT&T. That's a big deal because it implies the Department of Justice is the only regulatory agency looking at the transaction.

"The DOJ must be able to defend a decision to block the deal in a court of law and our regulatory experts tell us that they would likely lose in court,” wrote Fritzsche. “Our contacts tell us that this deal presents nothing out of the ordinary compared to other vertical mergers that DOJ has approved for years. This legal and practical reality does not mean that the incoming White House couldn’t try to assert leverage over the conditions or terms of approval through indirect channels.”




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