AT &T’s $85.4 bln ‘merger’ with Time Warner approved
No antitrust problems
LOS ANGELES, June 13, (RTRS): AT&T’s $85.4 billion proposed merger with Time Warner can proceed and does not pose antitrust problems, a federal judge ruled on Tuesday.
US District Judge Richard Leon announced his decision at a hearing at the federal courthouse, gathering all of the parties together for a dramatic coda after a sixweek trial.
The decision was definitive, as Leon read from his opinion in the courtroom and concluded that the government had failed to prove that the merger would substantially lessen competition. He imposed no conditions on the transaction.
Time Warner lead attorney Daniel Petrocelli told reporters outside the courthouse that the merger was on track to close June 20.
“We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner,” AT&T general counsel David McAtee said in a statement.
The Justice Department has not announced whether it will appeal the case. After he read from his opinion, Leon also strongly suggested that the government not seek a stay pending an appeal.
He said it would be a “manifestly injustice” outcome of the case if the government sought a stay to further delay the merger, costing both companies, which have a $500 million breakup fee and faced a self-imposed June 21 deadline to complete the transaction.
“To use a stay to accomplish indirectly what could not be done directly – especially when it would cause certain irreparable harm to the defendants – simply would be unjust,” Leon said. “I hope and trust that the government will have the good judgment, wisdom and courage to avoid such a manifest injustice.”
Leon also seemed to be urging the government to think twice about even pursuing an appeal. He noted the “staggering cost” of the investigation, litigation and trial, saying that it has “easily” run into tens of millions of dollars for the companies and the government.
Makan Delrahim, the chief of the Antitrust Division, told reporters afterward that he was “disappointed. We obviously don’t agree.” He said they are still reviewing the opinion, which is 170 pages.
The Justice Department’s Antitrust Division challenged the vertical merger by arguing that it would ultimately cost consumers. The crux of the DOJ’s argument was that AT&T-Time Warner would use its increased leverage as a bulked up entity to extract higher carriage fees for channels like TBS, TNT, and CNN.
It also argued that the combined company could withhold the use of HBO as a promotional tool by AT&T’s rivals, and that the merger conglomerate would have the incentive to coordinate with another big media company, ComcastNBC Universal, to try to limit the growth of new streaming upstarts.
Leon found those arguments unconvincing.
In his opinion, he seemed to side with AT&T’s defense that, far from withholding Time Warner content from rivals to gain an advantage, the merged company instead would have the incentive to seek maximum carriage of content across an array of platforms.
He also was receptive to AT&T’s case for sizing up the merger in the context of rapid changes in the media landscape, with the rise of Netflix, Google and Amazon as rivals for consumers and advertisers.