Published: Wed, June 13, 2018
Life&Culture | By Sue Mclaughlin

Mega Merger: Impact of AT&T's Time Warner acquisition

Mega Merger: Impact of AT&T's Time Warner acquisition

Market players say they're expecting AT&T's go-ahead to unleash further M&A activity down the road - much of which will be funded in the credit markets.

"This ruling, coupled with the government's abdication of open Internet protections yesterday, means the future of the Internet and content distribution is in the hands of a few, increasingly consolidated and powerful corporate gatekeepers", the Writer's Guild of America West told The Register.

He took issue with the government's analysis that the merger would result in higher prices for consumers, telling a packed courtroom that the findings "rested on improper notions."‬ And Leon also warned the US government against seeking a stay on the merger if it brings an appeal for the goal of trying to stymie the deal.

"Makan Delrahim seems personally invested in this case, so we suspect DOJ would appeal", Paul Gallant, an analyst at Cowen & Co. wrote.

AT&T stated on Tuesday that it hopes to complete the purchase by June 20.

AT&T-Time Warner is considered a vertical merger, as AT&T is a content distributor and Time Warner is a content creator. AT&T has been the nation's largest pay-TV company since it acquired DirecTV in 2015, and is one of the largest providers of home and mobile broadband service. Time Warner could already make such threats, but the DOJ claims it would have greater incentive because it could benefit from some subscribers switching over to AT&T's networks (DirecTV, U-verse and DirecTV Now). As Gigi Sohn, a former top aide to the Federal Communications Commission chairman under President Obama, put it during the trial, "If we return to a place where. there's a presumption that big is bad - bad for democracy, bad for consumers - I think that's a good place for antitrust law and antitrust enforcement to be".

Leon has ruled in favor of AT&T in the government's antitrust suit to block AT&T's proposed merger with Time Warner .

He added: "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".

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He said during the trial that the merger with Time Warner is a "significant shift in strategy" for AT&T, explaining the company knew that smaller acquisitions for content wouldn't work.

Critics charged that Trump had come out against the deal because of Time Warner's CNN, which has been highly critical of his presidency.

A Comcast-Fox deal would be another vertical merger, like the AT&T-Time Warner deal.

Consumer advocacy group Public Knowledge was disappointed by today's ruling.

"If what you see is a pattern where friends of the president get their deals approved and his enemies are challenged, it's problematic", Levin said.

The approval could encourage other companies pursuing similar tie-ups.

Democrats on Capitol Hill have raised questions about the Justice Department's motivations and the White House's influence in deciding to take the case to court. But the Justice Department's antitrust vigor is now considerably diminished.

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