Has the AT&T/Time Warner Merger Finally Succeeded?
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AT&T’s purchase of Time Warner is now done after the U.S. Department of Justice declined to apply for a stay of a court ruling that let the deal proceed.
A federal judge decided that AT&T’s $85.4 billion deal was legal, and it didn’t impose conditions on the takeover.
Thus, the Trump administration’s high-profile opposition to AT&T’s bidding has come to a close.
The Department of Justice sued last year to block the deal, noting AT&T’s ownership of satellite company DirecTV and its position to raise costs for other distributors wanting to air Time Warner productions, which could impact prices for customers who watch CNN and other content from Turner Broadcasting.
AT&T assured the Department of Justice that it will take care to manage Time Warner’s Turner Broadcasting separately from its already owned unit DirecTV. It has promised to erect a firewall between Turner and AT&T, to avert the sharing of pricing decisions and other strategic information.
The Justice Department retains leverage to ensure AT&T acts accordingly. The department has the legal prerogative to appeal the merger decision even after the deal is done.
Another Antitrust Case Coming
Consumer organizations, cable companies, and antitrust lawyers are concerned, as this outcome will inevitably impact the Justice Department’s future enforcement decisions.
There’s another vertical media takeover on the horizon, with Comcast having tendered an offer for a large segment of 21st Century Fox.
Comcast had articulated in the merger proposal that the AT&T decision would influence Comcast’s position; and as soon as Comcast saw the court’s green light, it officially offered $65 billion for many of Fox’s assets. Fox shares quickly rose to an all-time high.
This pits Comcast against Disney in a bidding war. If Fox decides to accept Comcast’s bid, Disney may quickly move to beat Comcast’s offer.
Meanwhile, the American Cable Association, representing smaller cable companies, has asked the Justice Department to block the Comcast-Fox merger in the name of consumer welfare.
The context for this tension is a rapidly changing media sphere, with video in demand across more platforms than ever before.
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