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14 June 2018, 03:15 | Regina Holmes
AT&T-Time Warner Merger Gets The Green Light From Federal Court
"AT&T is merging with Time Warner not to thwart online viewing, but to advance it, by enabling AT&T to introduce new video products better suited to mobile viewing", the company argued in papers filed with Leon this spring.
After almost two years, AT&T is on the cusp of completing its acquisition of Time Warner, a deal it struck in a bid to become an entertainment giant that can feed Time Warner programming like HBO and CNN to its 119 million mobile, internet and video customers, and go head-to-head with Netflix Inc. and Amazon.com Inc. He said AT&T plans to close the deal on or before June 20.
The Justice Department's Director of Litigation - and the government's lead lawyer in the AT&T case - Conrath also led the legal charge in a case against American Express argued before the Supreme Court this spring.
"We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner", said Assistant Attorney General Makan Delrahim. Fox has a 39 per cent stake in that company and has been trying to buy outright, with the intention of selling the full company to Disney as part of that deal. The acquisition prices are expected to rise as competition heats up between the media giants. The Justice Department was opposed to the acquisition, but the case was taken to the courts and the verdict finally came in earlier this week. "In a scenario in which the Government appeals but does not secure a stay of the ruling, we would expect the merger to be consummated and our review completed", Moody's wrote in a research note. He rejected testimony by distributors who said they were anxious Turner would be able to raise prices.
In making its case, the US government argued that the merger of AT&T could harm consumers in a number of ways.
After the decision, Mr Petrocelli said: "We were surprised when the case was brought and as I said in closing arguments, it's a case that never should have been brought".
AT&T originally announced the deal on October 22, 2016, just a few short weeks before Donald Trump was elected president.
Once president, Trump regularly called CNN "fake news" and posted on Twitter in July 2017 a doctored video of him beating up a supposed CNN journalist.
There was also concern that the federal lawsuit might be politically motivated. Now that the merger has been approved look for the service to roll out this year.
But AT&T rejected that idea, stating in a court filing that, "Divestitures here would destroy the very consumer value this merger is created to unlock". "It looks bad to lose", said Radia. And because Comcast has less of a presence outside the U.S., the company expects it can get global clearance easily. That leverage would allow AT&T to raise prices for Time Warner content, with those costs being passed on to consumers, according to the Justice Department.
The reordering of the media landscape comes as cable, telecoms and media companies scramble to compete with tech companies including Amazon, Apple and Netflix, which are spending billions to develop their own empires. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news". The government's star witness was Carl Shapiro, an economist at the University of California, who used an economic model to predict that consumer cable bills could rise by $500 million annually in aggregate by 2021. AT&T attacked that projection as baseless, repeatedly poking holes in the various inputs Shapiro used to calculate the estimate.
Opponents of the deal, meanwhile, are pointing to both Leon's decision and yesterday's removal of net neutrality protections as a clear signal that things are going to be getting worse (and more expensive) for consumers.