A US federal judge approved the $85 billion merger of wireless and broadband giant AT&T with media-entertainment conglomerate Time Warner — a high-stakes ruling that will affect the future of Big Media, Big Tech and Big Business. / AFP PHOTO / NICHOLAS KAMM
by Rob Lever
Agence France-Presse
WASHINGTON, United States – A US judge Tuesday approved the $85 billion merger of wireless and broadband giant AT&T with media-entertainment conglomerate Time Warner, delivering a stinging rebuke to Donald Trump’s administration in its first major antitrust challenge.
Federal Judge Richard Leon said the government had failed to meet its burden of proof that the tie-up between the largest US pay-TV operator and the media entertainment giant would harm competition.
The case had been closely watched as setting a benchmark for other big corporate tie-ups, especially in the media and communications sector.
Leon said the case fell short on all counts and warned the government against seeking to delay the deal with an appeal, saying that would cause “irreparable” harm to the two companies whose tie-up has been delayed for a year and a half.
“There would be no irreparable harm to the government (with a delay), only to the companies,” Leon told the packed courtroom in an unusual session to announce his opinion.
“The government has taken its best shot and lost.”
He said that even if his ruling is overturned, it would be possible for an appeals court to “unwind” the merger.
Leon’s ruling of some 170 pages was a total victory for the companies, saying the government failed to back up its three theories of harm to consumers from the mega-merger.
He maintained that the government’s claim that pay TV costs would rise from the tie-up was based on “speculative” logic and that its study from an expert witness was contradicted by other evidence from the government.
– ‘Sound and proper’ repudiation –
Daniel Petrocelli, chief attorney for the defendants, told reporters outside the courthouse that the decision nevertheless marked a “sound and proper” repudiation of the government’s case.
“We’re disappointed that it has taken 18 months to get here but we’re relieved that it’s finally behind us,” Petrocelli told reporters.
He said the ruling “stands as a testament to the wisdom of the combination of these two great companies and how it will benefit consumers for generations to come.”
AT&T general counsel David McAtee said in a statement he was pleased with the outcome.
“We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative,” McAtee said.
Makan Delrahim, head of the Justice Department’s Antitrust Division, said the government was considering its next steps.
“We are disappointed with the court’s decision today,” he said in a statement.
“We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner.”
President Donald Trump had previously denounced the merger, vowing that his administration would block it because it would concentrate corporate power unacceptably.
This aroused speculation among critics that Trump could be retaliating due to critical coverage of his administration from news broadcaster CNN, a Time-Warner property.
Petrocelli said his legal team sought to demonstrate that the companies were singled out but that the judge refused to hear any evidence on that.
“We were not able to ascertain what the decision-making process was,” he said.
“The court wanted to try this case on the merits.”
A number of consumer groups have backed the Trump administration’s decision to sue to block the deal, on the assumption that combining the largest pay TV operator with a major media-entertainment player would diminish competition and lead to higher prices.
Joshua Stager of the New America Foundation’s Open Technology Institute called the decision “a loss for consumers and the American economy.”
“The telecommunications market is badly broken, and this merger will only make it worse,” Stager said.
“The Justice Department was right to bring this case on behalf of the American people and right to recognize that vertical deals can threaten innovation.”
Other analysts maintained that because it is a “vertical” tie-up of two companies without overlapping operations, it should pass muster based on legal precedent for the past three decades.
AT&T and Time Warner argue they need more scale to compete with online rivals like Netflix and Amazon and with Silicon Valley giants like Google, Facebook and Apple which are expanding in the sector.
