M&A MANIA AHEAD
Tie-up spree seen after AT&T deal is OK’d
Both AT&T and merger bankers across Wall Street celebrated on Tuesday after a judge approved the telecom’s $85 billion acquisition of Time Warner.
After 600 days of debate and a six-week trial, Judge Richard Leon totally rejected the government’s argument that the vertical media merger would lead to higher prices for consumers.
President Trump’s Justice Department claimed the merger of a pay-TV distributor with a programmer with a deep and coveted trove of content would allow AT&T to raise prices — or keep some of Time Warner’s CNN, HBO or TBS content from rivals.
AT&T lead lawyer Dan Petrocelli scoffed at that notion — both in legal briefs and during the trial — saying the growing power of Netflix, Amazon and Apple in a quickly evolving media market made getting larger a necessary ingredient in a recipe to stay competitive.
Petrocelli may have thought Trump brought the lawsuit merely because of his hatred of CNN — but his effort to probe a White House-Justice connection was turned aside by Leon.
With Time Warner, AT&T will control DirecTV, the country’s largest pay-TV distributor, the second-larg- est cellular network and Time Warner’s popular programming.
AT&T has agreed not to close the transaction for six days, until Justice decides on an appeal.
“We look forward to closing the merger on or before June 20, so we can begin to give consumers video entertainment that is more affordable, mobile and innovative,” AT&T said in a statement.
Leon, when reading his opinion, urged the government not to seek a stay if it appeals — a move that could delay or destroy the merger.
Time Warner can walk away from the merger agreement June 21.
Justice said it is weighing its options.
“I thought it was telling that Leon warned against asking for a stay,” said David Scharf, litigation partner at Morrison Cohen, adding that Leon likely is concerned that Justice might get the stay delaying the merger even if it ultimately loses its appeal.
A stay could delay the deal four to six months, legal experts said.
If the merger stands, it would have a big impact on the way consumers watch media, Wharton professor Herbert Hovenkamp — who is considered to be the dean of antitrust law — told The Post.
“It would mean more digital companies would attempt vertical mergers and that the industry would become more siloed,” he said.
Hovenkamp believes distributors will likely acquire content that can be seen only over their devices, forcing consumers to subscribe to multiple services.
“My instinct is the people who will get hurt by this decision are older people who use cable television as their primary source,” Hovenkamp said.
With the government’s loss, Comcast is preparing to make a rival bid for TwentyFirst Century Fox — also a vertical acquisition — as early as Wednesday.
CVS Health, which has a pending $68 billion deal to buy Aetna, and Cigna, which has a $54 billion deal to buy Express Scripts, are likely relieved as they, too, are seeking clearance for controversial vertical mergers.