United States judge clears AT&T merger with Time Warner with no conditions

Esequiel Farfan
Junio 13, 2018

U.S. district judge Richard Leon sided with AT&T, approving the deal without conditions.

The DOJ filed suit against AT&T in November of past year, claiming that if the deal were allowed to go through, Time Warner's Turner television networks could be withheld from competing TV carriers or licensed at such a high cost as to give AT&T (who also owns DirecTV) an unfair advantage over its competitors.

AT&T would use its leverage over the must-have shows, in particular HBO's Game of Thrones or National Basketball Association games on TNT, to charge Comcast or Verizon more than it would charge itself for distributing Time Warner channels, giving itself a competitive advantage, the government claimed. Stating that the Justice Department failed to meet its burden of proof, he denied any attempt by the DOJ to stay his opinion during appeal, saying that it would be "unjust".

The Justice Department argued that the merger between AT&T and Time Warner would introduce unfair advantages in the marketplace.

Analysts say the decision will bolster firms such as Comcast - which is considering bidding for 21st Century Fox assets, including its stake in Sky, in a challenge to a deal announced between Fox and Disney previous year.

AT&T stated on Tuesday that it hopes to complete the purchase by June 20.

In making that ruling, Leon reaffirmed the judiciary's traditional tolerance for "vertical integration" - the technical term for mergers between companies that operate related, but distinct, businesses. Judge Richard Leon ruled the deal is legal and he did not impose any conditions on the merger.

United States judge clears AT&T merger with Time Warner with no conditions
United States judge clears AT&T merger with Time Warner with no conditions

He added that the evidence presented at trial showed the deal would probably reduce prices for AT&T customers, without leading to greater costs for subscribers of other services.

Leon, whose skepticism about the government's case was clear during the trial, didn't buy any aspect of the the government's theory that a combined company would give AT&T too much leverage in programming talks with competitors of Time Warner's Turner Broadcasting. Assistant Attorney General Makan Delrahim, who heads up the antitrust division, said in a statement that he was disappointed in the court's decision and he reiterated the government's belief that the merger will harm consumers.

AT&T-Time Warner is considered a vertical merger, as AT&T is a content distributor and Time Warner is a content creator.

Levine/NewscomAn ill-advised effort by the Department of Justice to stop AT&T from buying out Time Warner for more than $85 billion was rejected by a federal judge today. AT&T's chief executive officer, Randall Stephenson, said the hiring had been "a big mistake".

AT&T originally announced the deal on October 22, 2016, just a few short weeks before Donald Trump was elected president.

Shares of AT&T were about flat in after-hours trade following the decision, while Time Warner rose more than 5 percent.

"This is a disappointing result, and we expect the government will appeal", Public Knowledge Senior Counsel John Bergmayer said.

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