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CEO Daily: Wednesday, 29th March

Good morning.

The AT&TTime Warner deal looks more likely to win approval in the wake of this week’s appointment of Makan Delrahim to head the Justice Department’s antitrust division. In an interview last October, Delrahim said he did not think the merger raised major antitrust issues. “The sheer size of it, and the fact that it’s media, I think it will get a lot of attention,” Delrahim said in an interview. “However, I don’t see this as a major antitrust problem.”

During the campaign, Trump repeatedly criticized the merger, saying it concentrated too much power in the hands of a few. But since the election, he has stayed mum. One potential benefit of the deal for the President would come if AT&T changed out the leadership at CNN, which has been relentlessly critical of, and criticized by, the Trump administration

The AT&T deal won’t be the only one to benefit from the new regime. A survey of M&A professionals by the Brunswick Group, out this morning, shows many believe the prospect of corporate tax reform, repatriation of overseas profits, and a decrease in antitrust scrutiny will fuel an increase in deals. The hottest sectors: healthcare, pharma, and energy.

The survey also showed M&A professionals expect shareholder activism to remain strong in 2017, with target companies more likely to settle (58%) than fight (42%).

More news below.

Alan Murray

Top News

Brexit Begins

The U.K. officially gives notice of its intention to leave the EU today. Despite the recent cyclical upturn in the Eurozone, nothing has happened since the June referendum to suggest that either the EU or U.K. will be better off as a result, with trade barriers, less labor mobility and a less efficient financial industry among the likeliest outcomes. The EU is set to publish a broad negotiating strategy within a couple of days, which will send an important signal about whether it intends to punish the U.K. to deter future defections, or whether more pragmatic (i.e., business-oriented) views will prevail. Back in Britain, the devolved Scottish parliament voted yesterday to demand a new referendum on independence from the U.K.. Time

It’s (Almost) All Good News for Fox

Donald Trump’s election victory gave Fox News the best quarter in history for any cable news channel, according to data from research company Nielsen. Fox had all of the top 10 most-watched shows on cable news, averaging more than CNN and MSNBC put together (even though CNN also had its best quarter in 15 years). However, it’s not all good news. The Financial Times reports that Fox News’s former CFO Mark Kranz has been granted immunity from prosecution as part of a probe into whether it misled investors by hiding multiple settlements with former employees alleging sexual harassment by then-CEO Roger Ailes.  That suggests that Fox’s legal problems still have legs. Fortune

Clean Power Plan Goes up in Smoke

President Donald Trump signed an executive order rolling back his predecessor’s Clean Power Plan, the centerpiece of the U.S.’s existing commitment to tackle Climate Change by cutting carbon dioxide emissions. Its practical effects will be limited by the encroachment of ever-cheaper renewables and ever-more abundant shale gas. But it has a two-fold symbolic importance: it completes the Republican Party’s defeat of perceived executive overreach in energy policy by the last administration (Obama had resorted to executive orders because of Congressional opposition), and it symbolizes yet another abdication of leadership over an issue of global importance as well as a refusal of multilateralism. In that regard, it’s consistent with withdrawal from the TPP trade deal, and with hints of a weakening commitment to NATO. Fortune

Wells Fargo Settles Action Over Fake Accounts

Wells Fargo said it agreed to pay $110 million to settle a class-action lawsuit over accounts its staff opened without clients’ consent. It’s the first private settlement that Wells has reached since paying $185 million to federal and local authorities last year over its sales practices, and one that could resolve a further 11 cases if it’s formally approved in court. The bank has already provisioned against the settlement. Fortune

Around the Water Cooler

Westinghouse’s Financial Meltdown

Westinghouse, once the crown jewel in the U.S.’s civil nuclear power industry, filed for Chapter 11 bankruptcy protection. The filing gives it some freedom to renegotiate construction projects dogged by delays and cost overruns, although its clients in the utility sector will likely seek damages. Parent Toshiba now estimates Westinghouse’s total liabilities at $9.8 billion, more than 50% above its previous estimate. It’s not yet clear whether more resignations will follow that of chairman Shigenori Shiga last month. Back in Japan today, Toshiba will close the first round of bids for its chip business, which it is selling in order to plug the hole in its balance sheet. Fortune

Buoyant Consumers Chase Home Prices Higher

Home prices in the U.S. rose at their fastest rate in nearly three years in January, driven by job growth, a large demographic of aspiring new owners and a shortage of homes on the market. Inventories of homes on the market are still close to an 18-year low, down 6.4% in February. At a 5.9% clip, prices are rising more than twice as fast as wages, a trend that will be hard to sustain in the long run, but with consumer confidence at its highest in 16 years, the housing market looks pretty well set for the immediate future. WSJ, subscription required

A Big Chinese Break for Tesla 

Tesla Motors got a hugely significant vote of confidence Tuesday. It said China’s Tencent Holding, best known for its social media and gaming products, has built a stake of over 5% in the company. For a company that has depended disproportionately on evangelical retail investors, having a shareholder with such deep pockets (Tencent’s market value is over $270 billion) and an established record as a long-term builder of businesses onboard is a big plus. All the more so since Elon Musk could use someone who will open doors for him in a market that buys as many electric cars as the rest of the world put together. Fortune

Snap: Facebook Factor > Wall St. Analysts

Imitation may be the sincerest form of flattery, but that doesn’t stop it being bad for the inventor’s business. Shares in Snap fell over 6% after Facebook said it would launch three new features on its main app that essentially duplicate some of the things that have made Snapchat so popular, such as disappearing photo-montages and camera filters. Instagram has already made big inroads into Snapchat’s user base by using similar tactics, and the risk is clearly that future advertisers, upon whom Snap’s business model depends, will stay with more established social media. The move came despite a wave of research from the banks that supported Snap’s IPO, which estimated upside for the stock at an average 20% over the next 12 months. Fortune