I think we all saw this one coming. A Judge has ruled that AT&T can purchase Time Warner. How and why are two questions that I’ll attempt to answer, but in the meantime, let’s back this up a bit. Last November, the Department of Justice served AT&T with an antitrust lawsuit because of their proposed purchase of Time Warner. The trial for that just wrapped up last month. The Department of Justice is saying that the merging of these two companies is going to threaten competition, so they’re adamantly against it. AT&T, however, is saying that this particular deal won’t produce “anticompetitive effects”. They are also saying that the DOJ hasn’t effectively demonstrated that it would. Which is why, District Judge Richard Leon has issued his ruling on the suit, and he’s declared that AT&T can, in fact, purchase Time Warner.
This has been going on for quite some time. Back in 2016, AT&T first made the announcement that they wanted to purchase Time Warner at an estimated $85.4 billion. The two companies then entered into discussions with the DOJ in 2017, in order to avoid an antitrust lawsuit. Those conversations didn’t work out for either company and then the DOJ went ahead with their lawsuit, regardless. AT&T had indicated that this was a “radical and inexplicable” move on the DOJ’s part. But like I said, AT&T is saying that the DOJ doesn’t have a reason for said antitrust lawsuit.
Judge Leon has reportedly put no conditions on the deal, and the result of this case could have some serious impacts, far beyond this particular merger. For example, Disney’s bid to buy a part of 21st Century Fox may be impacted as the ruling could encourage Comcast to put forward a competing bid. This is something that Comcast has already said that they might do, and now there is nothing stopping them. This is what happens when precedence is set! Further, there is a proposed T-Mobile and Sprint merger on the table, and CVS might now be able to purchase Aetna. Where it will end is anyone’s guess.
The DOJ has gone on record and stated:
“We are disappointed with the court’s decision today. 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.”
The DOJ is also considering a possible appeal as part of next steps. But will that be enough? And, is it too late? That said, AT&T had a different statement to make, following the judge’s announcement:
“We are pleased that, after conducting a full and fair trial of the merits, the court has categorically rejected the government’s lawsuit to block our merger with Time Warner.”
As I said, there isn’t a lot of time. AT&T’s general counsel David McAtee has stated that the company will work to complete the merger by June 20th. Which, is just next week, so how could the DOJ appeal? Perhaps they simply file some paperwork, to stop the merger from completing, but again – they literally have 7 days to do this. I’m not saying it can’t be done, but they need to be able to prove their case as to why the merger shouldn’t go through.