The U.S. Department of Justice wants to undo the AT&T Inc. (NYSE: T) buyout of Time Warner, a deal that is already done. The Justice Department tried this before the deal closed and was unsuccessful.
If the government prevails this time, Time Warner will need to find a group of people to become its new senior management, and it will have to add a new board of highly qualified members. Among the people who constitute these two groups, there will be a need to return the company to the market as a public corporation, convince Wall Street it has not been crippled, and decide if each of its divisions should operate as before they were restructured after the buyout. The effort will need to be Herculean.
The decision not to block the deal was made at the District Court level, in particular by U.S. District Judge Richard Leon. This means the appeal will need to go to the U.S. Circuit Court of Appeals and then, perhaps, to the Supreme Court. The actions could take months. In the meantime, the question of new management and a new executive suite will remain in limbo.
The Justice Department’s case against the buyout was based on the theory that it crossed the line of antitrust rules. Some of the laws that govern these matters are ancient. That makes it harder to guess how the eventual judgment may fall. By the time the appeal gets to the Supreme Court, if it does, the court may have a new member.
Time Warner management was led by CEO Jeff Bewkes. He received almost $100 million when the deal was closed. He may not want to come back. Other top executives collected tens of millions of dollars. They may not want to return either. What would be the reward for doing so?
Finding qualified people and vetting them to take the reins of Time Warner, and putting together a board, will take a long time. The company better start the process, even if it is not necessary.