Published: Wed, June 13, 2018
Culture&Arts | By Laurence Reese

High-stakes ruling awaited on AT&T-Time Warner merger

High-stakes ruling awaited on AT&T-Time Warner merger

U.S. District Court Judge Richard Leon made his decision in front of a packed house of people who were awaiting the crucially important ruling.

The Justice Department had argued that letting AT&T (a content distributor) combine with Time Warner (a content creator) would reduce competition between the mobile-phone giant and its rivals, and thus, hurt consumers. The decision means the telecom giant will now control highly-sought after programming - including Game of Thrones, the Harry Potter movie franchise, and CNN - as well as the infrastructure that delivers that content to tens of millions of living rooms televisions and smartphones.

Leon slammed any potential attempt by the government to keep the merger on hold pending appeal, saying the Justice Department had had its chance.

More news: NCAA changes redshirt rule in college football

The court's decision in the case could have an enormous impact on the media landscape and the fate of future corporate mega-mergers. Of course, that was prior to the court's ruling on the AT&T and Time Warner merger today. CNBC is reporting that Comcast will try to buy Twenty-First Century Fox if AT&T buys Time Warner.

AT&T had said it needed Time Warner to compete with the likes of Amazon, Netflix and Google, and that the deal would improve technology and give consumers more choices.

While a trial judge sided with Conrath, an appeals court ruled against Justice. With that added revenue, it could eventually lower the cost of its subscription services, the company argues.

More news: Fyre Festival Promoter Arrested on New Set of Fraud Charges

In a scathing opinion, Leon concluded that the government had failed to show competitive harm and urged the US government not to seek a stay of his ruling pending a potential appeal, saying it would be "manifestly unjust" to do so and not likely to succeed.

"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. The theory seems to be that the merged company would simply forgo this revenue in a speculative hope that withholding Time Warner content from distributors would induce masses of viewers to switch to AT&T-and maybe, one day, put competitors out of business.

Aside from proving Stephenson is a fan of the Oxford comma, the government argued that this quote showed AT&T did intend to use Time Warner's content as a weapon.

More news: SNP MPs stage mass walkout during PMQs over Brexit

A US court ruled that AT&T's deal for media giant Time Warner could go ahead over the objections of the US Department of Justice, which anxious that the combination would raise prices for consumers. AT&T CEO Randall Stephenson also said past year, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done". At a campaign rally in 2016, Trump said his administration would not approve the deal, raising concerns over political interference. President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few". That's not to say that vertical mergers get through regulatory approval free and clear - the FTC has fought 22 vertical mergers since 2000 - but they receive less scrutiny than horizontal mergers.

Like this: