Trump Victory Throws Doubt on AT&T-Time Warner Deal, Net Neutrality


Donald Trump's victory in the presidential campaign throws doubt on AT&T Inc.'s proposed acquisition of Time Warner Inc. and could undermine the government's net neutrality rules. But many of his positions on the technology and telecommunications sectors are largely unknown.

Mr. Trump said in October that he would block the AT&T-Time Warner deal, and that he would try to break up the Comcast Corp.-NBC Universal merger. In both cases, Mr. Trump said the media is controlled by too few people.

Shares of AT&T rose 1.2% Wednesday, while Time Warner shares, which were already trading at a wide discount to AT&T's offer, fell 1.5%.

Analysts say other industry consolidation is more likely. Investors sent Sprint Corp. and T-Mobile US Inc. shares higher, believing a merger between the two wireless carriers was more likely under a Trump administration. Sprint shares rose 13%, while T-Mobile gained 5%.

T-Mobile CEO John Legere said the election is positive in "many ways" for T-Mobile and called for America to unite and move forward together. "Let's see what an out of the box, nontypical, nonpolitician can do for America," Mr. Legere said.

Richard Greenfield, an analyst at BTIG, said it is hard to predict what Mr. Trump's stance against the AT&T-Time Warner deal means for other sector consolidation. "Honestly, until we understand the extent of Trump's views on the dangers of media industry consolidation, it is impossible to know what deals could get done," he wrote in a research note.

Independent telecom analyst Roger Entner predicted the Federal Communications Commission would take a less activist role under Mr. Trump. Beyond that, it isn't clear because neither candidate said much about telecom during the campaign, he said. "It was basically not a topic at all, which means to me that they haven't really thought about it yet," Mr. Entner said during a conference call held by the industry trade group CTIA.

In the past, Mr. Trump made statements against net neutrality, saying it would "target conservative media" and comparing it against the Fairness Doctrine, which required broadcasters on government airwaves to provide balanced coverage of controversial issues. Net neutrality requires all web traffic be treated equally, and it doesn't allow certain content to get special treatment.

Analysts at New Street Research believe Mr. Trump will likely align with traditional Republican thinking on telecom policy. Particularly on complex, low-publicity items, "partisan gravity will be sufficient to bring Trump's view into line with his party's well-established path," researchers wrote in a note to clients earlier this year.

It would be difficult, but not impossible, for Mr. Trump to unwind the FCC's 2015 net neutrality rules. Those rules were upheld by a Washington, D.C., appeals court, but the telecom industry has appealed to the Supreme Court. If the court agrees to hear the case, and Mr. Trump is able to appoint conservative judges, it is plausible the rules could be overturned. The FCC could also simply reclassify the internet again, and turn it back to the more lightly regulated model used before, said Blair Levin, a former FCC official who now serves as an adviser to New Street Research.

More than a year ago, after Mr. Trump began his presidential campaign, the New Street Research analysts published a tongue-in-cheek research note about the impact his presidency would have on the U.S. telecom market. The note joked about how AT&T and Verizon Communications Inc. would succeed under a Trump presidency because "They are big. They are huge. They are tremendous."

New Street Research sent out a revised note a few months later after Mr. Trump began winning states in the Republican primary. We "thought the prospect of a Trump presidency quite low," they wrote.

Analysts at Citigroup say Mr. Trump's victory could affect some media stocks as his embrace of social media boosts Twitter Inc. and Facebook Inc., while his confrontational relationship with traditional outlets hurts CBS, Disney, Time Warner and Fox.

Likewise, Mr. Trump's stance on net neutrality could help cable companies like Comcast Corp. and Charter Communications Inc. but hurt over-the-top players like Netflix Inc., Citigroup said.

Mr. Levin said a rewrite of the 1996 Telecom Act is more likely given that Republicans now control both Congress and the White House. A new bill would likely rein in the FCC's power, he said. "The unpredictability of what happens now is so extreme," he said. "When it comes to policy, we are coloring outside the lines."

Thomas Gryta contributed to this article.