How the AT&T-Time Warner Merger Affects Consumers

  • How the AT&T-Time Warner Merger Affects Consumers

How the AT&T-Time Warner Merger Affects Consumers

Peter Dinklage and Conleth Hill in a scene from Game of Thrones.

US District Judge Richard Leon green-lit the merger without imposing major conditions as some experts had expected.

The Trump Justice Department had sued to block the $US85 billion merger, arguing it would hurt competition in cable and satellite TV and jack up costs to consumers for streaming TV and movies.

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.

The Justice Department could appeal the ruling, although it said only that it is considering its options.

The US stance on AT&T's purchase of Time Warner has formed a big piece of the M&A puzzle when it comes to competition. From Comcast's bid for 21st Century Fox to CVS's acquisition of Aetna, massive corporations increasingly have sought to expand their reach by buying up companies in different lines of business.

Daniel Petrocelli, lead attorney for AT&T and Time Warner, speaks with the media outside the U.S. District Court on June 12, 2018 in Washington, DC. Therefore, AT&T would likely increase the rates that other content distributors must pay to air Time Warner content - forcing its rivals to either raise prices on their subscribers (which would inspire some consumers to switch to DirectTV), or else accept lower profit margins (which would impair their ability to compete with AT&T in the long term).

But AT&T failed to provide any evidence suggesting that the DOJ's prosecution of the merger had "discriminatory effect and discriminatory intent", Leon said in a ruling earlier in the trial.

The ruling clears the way for the telecom giant to restart its merger engine, and could prompt a jumbo bond issue sized up to US$18bn, two investors said.

Executives at both companies broach the idea that the merger was singled out for antitrust enforcement because of President Donald Trump's animosity toward Time Warner unit CNN.

Aside from proving Stephenson is a fan of the Oxford comma, the government argued that this quote showed AT&T did intend to use Time Warner's content as a weapon. AT&T CEO Randall Stephenson also said past year, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done".

"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", McAtee said in a statement.

After the decision, Mr Petrocelli said: "We were surprised when the case was brought and as I said in closing arguments, it's a case that never should have been brought".

AT&T's politically charged takeover of Time Warner was approved by a United States judge on Tuesday in a blow to the Trump administration which had fought hard to have the deal scrapped.

The deal cost AT&T's top lobbyist, Bob Quinn, his job in May after it became public that AT&T had paid Trump's personal lawyer Michael Cohen $600,000 for advice on winning approval.