Published: Wed, June 13, 2018
Culture&Arts | By Dora Pope

U.S. Judge Approves AT&T's $85 Billion Merger With Time Warner

U.S. Judge Approves AT&T's $85 Billion Merger With Time Warner

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

We're still waiting to get a copy of the full ruling, but Bloomberg TV reported that US District Judge Richard Leon ruled entirely in AT&T's favor. In February, Rep. Elijah E. Cummings, the ranking member of the House Committee on Oversight and Government Reform, and Rep. Gerald E. Connolly, the ranking member of the Subcommittee on Government Operations, sent a letter to Attorney General Jeff Sessions asking for documents and emails between the Justice Department and the White House about the decision to sue AT&T and Time Warner.

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

In light of today's decision, Comcast, which has been eyeing its own content creator takeover of 21st Century Fox, will likely move forward with a bid as early as tomorrow.

It is worth remembering that the Justice Department is reviewing the T-Mobile/Sprint combination, and the Justice Department did not approve AT&T's purchase of Time Warner.

In its suit against AT&T, the Department of Justice alleges the merger would "greatly harm American consumers" through "higher monthly bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy", Makan Delrahim, head of the Justice Department's antitrust division, said when announcing the suit past year. Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.

AT&T and Time Warner announced their deal on October 22, 2016, in the midst of the bitterly contested presidential campaign between Donald Trump and Hillary Clinton.

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

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A vertical merger is when two companies who provide different or complementary offerings join forces, giving consumers access to a more comprehensive set of services, at a lower price, while still generating profits.

DOJ antitrust official Makan Delrahim said the government is disappointed in the court's decision and will consider "next steps".

For this reason, the government was hoping that Leon would at least put conditions on the merger, like requiring the telecom to sell off some of Time Warner's most coveted properties.

"The government's evidence is too thin a reed for this court to find that AT&T has, in that well worn turn of phrase, either the "incentive" or the "ability" to withhold HBO promotional rights in order to 'lessen competition substantially'".

The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically risky as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint.

The US cable company may have to raise as much as US$60bn of debt to finance a potential deal for Fox.

"That will really force AT&T and Verizon to have to work harder", the person said of the merger.

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.

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