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Judge rules AT&T can purchase Time Warner


He reportedly put no conditions on the deal. Last November, the Department of Justice slapped an antitrust lawsuit on AT&T's proposed acquisition of Time Warner and the trial resulting from that lawsuit wrapped up last month. The DOJ has maintained that merging the two companies as is would threaten competition, but AT&T has said the deal won't produce anticompetitive effects and moreover, that the DOJ hasn't effectively demonstrated that it would. Today, US District Judge Richard Leon has issued his ruling on the suit and has declared that AT&T can buy Time Warner. This has been a long-running issue, as AT&T first announced its plans to buy Time Warner for $85.4 billion in 2016. The companies then entered into discussions with the DOJ last year and rumors surfaced that the agency had suggested some divestitures in order for AT&T to avoid an antitrust lawsuit. But those conversations didn't work out in either group's favor and the DOJ went ahead with its suit. At the time, AT&T called the move a "radical and inexplicable departure from decades of antitrust precedent." When the trial ended, Judge Leon suggested the parties consider some remedies both could deal with depending on how he ruled. The DOJ said in its post-trial brief that most if its concerns stem from the combination of Turner -- which owns CNN, TBS and TNT -- with DirecTV and therefore they should be split in one way or another. It proposed that either AT&T not get Turner in the deal or that it should divest itself of DirecTV prior to acquiring Time Warner. AT&T wasn't on board, saying, "Divestitures here would destroy the very consumer value this merger is designed to unlock." AT&T CEO Randall Stephenson also said last year, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done. It's illogical. It's why we did the deal." Judge Leon reportedly put no conditions on the deal and the result of this case stands to have far-reaching effects on the media landscape and other groups considering or seeking vertical mergers. Most immediately, Disney's bid to buy a chunk of 21st Century Fox may be impacted as the ruling could encourage Comcast to put forward a competing bid, as it has already announced it might do. Other deals on the line include the proposed T-Mobile and Sprint merger, CVS' purchase of Aetna and Cigna's acquisition of Express Scripts. JUST IN: Statement from U.S. Assistant Attorney General on AT&T/Time Warner decision. In response to the ruling, US Assistant Attorney General Makan Delrahim said, "We are disappointed with the court's decision today. 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." He added that the DOJ would consider its next steps, which could include an appeal. "We are pleased that, after conducting a full and fair trial of the merits, the court has categorically rejected the government's lawsuit to block our merger with Time Warner," AT&T's general counsel David McAtee said in a statement. The company will now work to complete the merger by June 20th.

Court approves merger of AT&T and Time Warner


United States District Court Judge Richard J. Leon has ruled in favor of AT&T in the governments antitrust suit to block AT&Ts proposed merger with Time Warner . That decision matches word on the street over the past few weeks, and delivers a stern rebuke to the Trump administration, which had opposed the deal from its earliest days. The decision was made following the close of markets in New York, and after-hours trading was muted to the decision. In light of todays decision, Comcast, which has been eyeing its own content creator takeover of 21st Century Fox, will likely move forward with a bid as early as tomorrow. In October 2016, AT&T announced its plan to acquire Time Warner for $85.4 billion, and a total of $108 billion with debt. The DOJ moved to block the merger in March, arguing that the merger would reduce competition and hurt consumer choice. The nuances of this case are important, as the implications of this decision reach far beyond the individual businesses of AT&T and Time Warner to the vast media landscape as a whole. First off, its worth noting that the overall goal of antitrust regulations is to protect the consumer from unfair business practices that may arise from a consolidation of power within a single company. But size isnt necessarily whats most important in these types of cases. In fact, sometimes a merger can help competition and consumer choice, as is more often the case with vertical mergers. A vertical merger is when two companies who provide different or complementary offerings join forces, giving consumers access to a more comprehensive set of services, at a lower price, while still generating profits. Thats 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. AT&T-Time Warner is considered a vertical merger, as AT&T is a content distributor and Time Warner is a content creator. But the overall landscape complicates the decision a great deal. There are only a handful of companies in this space, and they are some of the most powerful companies in the world. AT&T itself is the largest telecom provider in the world, and via DirecTV, it is also the largest multichannel video programming distributor in the U.S. Time Warner, meanwhile, owns channels like TBS and TNT, HBO and Warner Bros., not to mention the assets to live sports and news orgs such as the NBA, MLB, NCAA March Madness and PGA. The DOJ has argued that this type of consolidation would give the merged AT&T-Time Warner the ability to raise prices, thwarting the competitions ability to compete by forcing them to raise prices to maintain carriage rights. The government has also argued that the newly rolled back net neutrality rules would no longer protect AT&T from, say, throttling Netflix if it didnt purchase and distribute Time Warner content. On the other side, AT&T and Time Warner (big as they may be) face steep competition from the FAANG companies (Facebook, Apple, Amazon, Netflix and Google), all of whom have made video a top priority. In fact, CNNMoney reported that AT&T-Time Warners counsel Daniel Petrocelli made the argument that traditional media orgs have already been left behind in the digital revolution. From the report: Petrocelli told Judge Leon that their estimates show FAANG is worth $3 trillion collectively, while an AT&T-Time Warner entity post-merger would be worth $300 billion. Were chasing their tail lights, Petrocelli said. Its also worth noting that President Trump has been publicly opposed to the deal since he was on the campaign trail. Remember, Time Warner owns CNN, which is the object of some of Trumps most focused hatred. At a campaign rally in 2016, Trump said his administration would not approve the deal, raising concerns over political interference. The government has argued that Trump did not communicate with antitrust officials over the deal and that their choice to fight the merger was not influenced by the White House.