Fed­eral judge OKs AT&T-Time Warner merger

Yuma Sun - - NATION / WORLD -

WASH­ING­TON — A fed­eral judge ap­proved the $85 bil­lion mega-merger of AT&T and Time Warner on Tues­day, a move that could usher in a wave of media con­sol­i­da­tion while shap­ing how much con­sumers pay for stream­ing TV and movies.

U.S. District Judge Richard Leon green-lit the merger with­out adding ma­jor con­di­tions to the deal. The Trump Jus­tice Depart­ment had sued to block the $85 bil­lion merger, ar­gu­ing that it would hurt com­pe­ti­tion in cable and satel­lite TV and jack up costs to con­sumers for stream­ing TV and movies.

Now, the phone and payTV gi­ant will be al­lowed to ab­sorb the owner of CNN, HBO, the Warner Bros. movie stu­dio, “Game of Thrones,” cov­eted sports pro­gram­ming and other “must-see” shows. The Jus­tice Depart­ment could de­cide to ap­peal the rul­ing, how­ever.

“The im­pact from this de­ci­sion will have wide reach­ing ram­i­fi­ca­tions across the telecommunications, media, and tech in­dus­try for decades to come,” said GBH In­sights an­a­lyst Dan Ives. “For AT&T and Time Warner, this is a ma­jor vic­tory lap.”

The mega-merger was a high-stakes bet by AT&T Inc. on com­bin­ing a com­pany that pro­duces news and en­ter­tain­ment with one that fun­nels it to con­sumers. The merged com­pany, ex­ec­u­tives said, would be bet­ter able to com­pete in an era in which peo­ple spend more time watch­ing video on phones and tablets and less time on tra­di­tional live TV on a big screen.

Leon said the gov­ern­ment failed to prove that the merger would lead to higher prices and other ham to con­sumers.

“The gov­ern­ment here has taken its best shot to op­pose this merger,” Leon said, speak­ing to a packed courtroom in an un­usual ses­sion weeks af­ter the trial ended. But, he added, “the gov­ern­ment’s ev­i­dence is too thin a reed for this court to rely on.”

Leon re­jected the no­tion of tem­po­rar­ily sus­pend­ing the merger for a pos­si­ble ap­peal by the gov­ern­ment. The “drop dead” dead­line for com­plet­ing the merger is June 21. If it’s not wrapped up by then, ei­ther com­pany could walk away, and AT&T would have to pay a $500 mil­lion breakup fee.

The rul­ing is a sting­ing de­feat for the Jus­tice Depart­ment. The pro­posed merger was so big and con­se­quen­tial that it forced fed­eral an­titrust lawyers to re­con­sider le­gal doc­trine that per­mit­ted merg­ers of com­pa­nies that don’t di­rectly com­pete. First floated in Oc­to­ber 2016, the deal also brought fire from then-can­di­date Don­ald Trump, who promised to kill it “be­cause it’s too much con­cen­tra­tion of power in the hands of too few.”

Dal­las-based AT&T is a wire­less, broad­band and satel­lite be­he­moth that also be­came the coun­try’s big­gest pay-TV provider with its pur­chase of DirecTV. It claims about 25 mil­lion of the 90 mil­lion or so U.S. house­holds that are pay-TV cus­tomers.

Leon’s rul­ing could shape the gov­ern­ment’s fu­ture com­pe­ti­tion pol­icy. The rul­ing could open the flood­gates to deal mak­ing in the fast-chang­ing en­ter­tain­ment and video­con­tent worlds. Ma­jor cable, satel­lite and phone com­pa­nies are bulk­ing up with pur­chases of en­ter­tain­ment con­glom­er­ates to com­pete against ri­vals born on the in­ter­net, like Ama­zon and Google.

Wait­ing in the wings are po­ten­tial big-bil­lions deals in­volv­ing 21st Cen­tury Fox and Dis­ney, Ver­i­zon and CBS, T-Mo­bile and Sprint. Comcast and Ver­i­zon are also jock­ey­ing for po­si­tion in the new land­scape.

As pres­i­dent, Trump has called the merger “not good for the coun­try” and said he be­lieved it would push pay-TV prices higher. Loom­ing in the back­ground of the deal has been Trump’s long-run­ning feud with Time Warner’s CNN, which he has of­ten de­rided as “fail­ing” and a pur­veyor of “fake news.”

AT&T has said it needs to buy Time Warner to com­pete with the likes of Ama­zon, Net­flix and Google in the shape-shift­ing stream­ing-TV en­vi­ron­ment. The com­bi­na­tion would push tech­nol­ogy for­ward and give con­sumers more choices, AT&T has promised.

“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,” said David McA­tee, AT&T Gen­eral Coun­sel. He said AT&T plans to close the deal on or be­fore June 20.

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