The Atlanta Journal-Constitution
WHY AT&T-TIME WARNER DEAL FACES NEW HURDLE
The Justice Department filed a motion to appeal the approval of AT&T’s merger with Time Warner on Thursday, extending the government’s legal challenge of a blockbuster deal that has reshaped the media industry.
A federal judge signed off on the deal a month ago, saying the government, in its suit to block the $85.4 billion agreement, did not sufficiently prove it would harm competition and consumers.
Since then, the companies have moved forward with the agreement, creating a media and telecommunications giant. An AT&T executive is already in charge of the Time Warner properties like HBO and news network CNN.
The Justice Department’s legal maneuvering will not immediately change the business. But if the Justice Department ultimately prevails, AT&T would have to detach the Time Warner business, now renamed Warner Media.
AT&T’s general counsel, David McAtee, expressed confidence about the company’s chances in an appeal. “The court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” he said in a statement. “While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DO J has chosen to do so under these circumstances.”
The Justice Department declined to comment beyond pointing to its filing to appeal.
The government made its filing on the same day Netflix beat out HBO for the most Emmy nominations — ending the premium channel’s 17-year run as the most-nominated outlet. AT&T and Time Warner executives have argued in court that the businesses had to merge to compete with new threats coming from Silicon Valley companies like Netflix, Amazon and Facebook.
The plan to appeal was made public late in the afternoon; shares in AT&T fell 1.3 percent in after-hours trading. The Justice Department had considered filing an injunction after the judge, Richard J. Leon of U.S. District Court in Washington, approved the deal June 12. The department did not go ahead with the
motion because AT&T said it would operate the media arm as a separate group, making it easier to unwind the business should the Justice Department succeed in an appeal.
By appealing, experts say, the Justice Department sends a clear signal that despite its court loss, it will be aggressive on mergers. Immediately after the merger was approved last month, Comcast announced its bid for 21 Century Fox’s entertainment assets.
“If they had not appealed it, it would have been a green light for vertical mergers to proceed apace,” said Andrew J. Schwartzman of Georgetown University Law Center.
As a candidate, Donald Trump, who had frequently criticized the Time Warner property CNN as “fake news,” vowed to stop the AT&T-Time Warner merger if elected.
“We will not approve in my administration because it’s too much concentration of power in the hands of too few,” he said at the time.
He exhibited more rosy feelings for the deal between Disney and Fox. “I know that the president spoke with Rupert Murdoch earlier today, congratulated him on the deal,” the White House press secretary, Sarah Huckabee Sanders, said in December.