Trump administration appeals $US85 billion merger of Time Warner and AT&T
The Trump administration says it will appeal against a court decision to allow the merger of media network Time Warner and telecommunications company AT&T.
This merger is one of the largest ever media deals and was completed barely a month ago on June 14, following a lengthy six-week trial.
If the US Department of Justice (DoJ) wins the appeal, the $US85.4 billion ($115.2 billion) deal will have to be unwound.
The government’s notice of appeal, filed in US District Court in Washington, did not disclose on what grounds it intends to challenge the approval given by US District Judge Richard Leon.
Judge Richard Leon had sharply urged the DoJ not to seek a stay of his ruling, saying that it would be “manifestly unjust” to do so and not likely to succeed.
In his ruling, the judge said the government had failed to show competitive harm.
What is at stake is whether AT&T can control Time Warner’s lucrative assets CNN, HBO, the Warner Bros movie studio, in-demand sports programming, Game of Thrones and other popular television shows.
Trump isn’t a fan of the merger
When the deal was first announced in October 2016, it was condemned by then-candidate Donald Trump, who promised to kill it “because it’s too much concentration of power in the hands of too few”.
Mr Trump has publicly feuded with Time Warner’s CNN, calling it “failing” and a purveyor of “fake news”.
AT&T chief executive Randall Stephenson told reporters on Thursday (local time) that the company was not surprised about the DoJ’s decision to appeal.
“They have the right to appeal. Everyone has the right to appeal,” he said.
“We have a very fact-based thoughtful order. It will be evaluated on those grounds.”
Some legal experts believe it would be difficult for the government to convince an appeals court to overturn Judge Leon’s ruling.
By opposing the merger, the government was forced to argue against a legal doctrine which favours vertical mergers — which is a combination between companies which do not compete directly with each other.
It was the first time in decades the government had challenged that doctrine by suing to block a vertical merger.
The Netflix, Google and Amazon threat
AT&T is a phone, cable and satellite company, and the biggest pay TV provider in the US — claiming about 25 million of the approximately 90 million US households that are pay TV customers.
The merger fuses a company that produces news and entertainment (Time Warner) with one that funnels that programming to consumers (AT&T).
AT&T argued, during the trial, that it needed to grow to survive in the era of Google, Amazon and Netflix.
It has committed to certain conditions under which it will run Time Warner’s Turner Broadcasting, which includes CNN.
For instance, it will manage the Turner networks as part of a separate business unit, distinct from operations of AT&T Communications.
In addition, AT&T Communications will have no say in setting Turner’s prices or other terms in contracts with companies that distribute its content.
However, that apparently was not enough to satisfy the DoJ, which declined to comment.