Without a doubt, the biggest cloud hanging over the head of the proposed $85 billion AT&T Inc (NYSE: T)-Time Warner Inc (NYSE: TWX) deal is concern among investors that regulators will ax the partnership before it
gets started.
On Benzinga's PreMarket Prep Tuesday, Drew Marcus, Managing Partner and Portfolio Manager of Sugarloaf Rock Capital, said he
thinks the deal should absolutely go through.
"This is a classic case of distribution combining with content, AT&T is distribution and Time Warner is content," said
Marcus. "Interestingly from a regulatory perspective, one could argue that the Department of Justice shouldn't even review it,
because they don't look at vertical integration. They look at horizontal integration."
Related Link: AT&T Will Offer
100 Channels For $35 A Month If Merger Approved
"However, maybe because its election season, Trump came out right away saying he wouldn't approve it, maybe that caused some
potential scrutiny. But on paper this should be an easy deal to approve, but in America right now bigger is not better, and that is
the cause for concern," added Marcus. "Wall Street right now seems to only thinking there's like a 40 percent chance of it going
through."
Expect More Consolidation To Follow
While Marcus feels pretty confident the deal will go through, he put Wall Street's sentiment of the deal passing were around 40
percent. He also expects to see more consolidation in the industry moving forward.
"I think you will see more consolidation in the sector, part of the reason is that multiples have been depressed," Marcus
concluded.
Listen to the full interview with Marcus at 20:28 in the clip below.
PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen
to the show live every morning from 8-9 a.m. ET here, or catch the
podcast here.
Image:
Mike Mozart, Flickr
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