AT&T Cleared to Take Over Time Warner; Mixed News for Sears

Written by Bill Leebens

While things are momentarily quiet in the audio biz itself, one monumental deal will likely change the landscape of media (including music) and business, forever.

Federal District Judge Richard Leon cleared the way for AT&T to take over Time Warner, throwing out the antitrust objections posed by the Justice Department. Approval of the deal, valued at more than $85 billion, is expected to trigger another wave of corporate mergers and acquisitions.

Communications companies like AT&T have in recent years increasingly claimed that lack of control over entertainment media puts them at a competitive disadvantage. Numerous potential deals have been on hold as the AT&T deal underwent 18 months of administrative and judicial scrutiny, and thousands of pages of arguments were exchanged by litigators. The first major deal expected to push towards closure in the wake of the AT&T deal is Twentieth Century Fox: a bidding war between Comcast and Disney for Fox is expected.

Expect to see plenty of 11- and 12-figure deals to appear in the near future.

I admit to being perversely fascinated by the continuing saga of Sears, which is rather like watching a landfill fire: nothing happens for a while as the fire smolders, then flames flare up all over the damn place, seemingly without cause or connection.

At the same time that CEO Eddie Lampert has blamed Sears’ woes upon online retailers like Amazon, a partnership between Sears and Amazon was being developed where tires purchased from Amazon could be mounted at Sears Auto Service Centers, and Kenmore appliances would be sold through Amazon. Increased revenue from the service agreement with Amazon brought a rare uptick in Sears stock. Starting with 47 stores, the program will soon expand to another 71.

That “uptick”, incidentally, is almost inconsequential. From a historic low of $2.14/share on June 4th of this year, SHLD zoomed all the way to $2.78. At the time of this writing, shares are hovering around $2.66. Had someone purchased massive amounts of shares at bottom, a modest profit could’ve been realized in the short term—but keep in mind that just seven years ago, in April of 2011, shares were at $131.

Despite the unusual bit of good news for the company, the bloodletting continues: Sears announced that 72 more stores would be closed in an unspecified “near future”, and the company announced losses of $424 million in the first quarter, with same-store sales down nearly 12% from the same period last year, and overall revenue was down a staggering 30%.

On top of all his other unfathomable actions, CEO Lampert has announced his hedge fund ESL Investments’ intent to purchase Sears’ famous Kenmore brand and its home improvement unit, some of the few valuable assets the company has left. Over the last several years, a massive sell-off of real estate holdings, the sale of the Craftsman brand , and licensing of the DieHard brand have systematically stripped Sears of its hard assets.

It will be interesting to see what happens next in this bizarre saga.

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