Categories: Media Moves

Coverage: Court rules in favor of AT&T/Time Warner deal

AT&T Inc. emerged victorious on Tuesday over the Trump administration’s drawn-out attempts to block its $85.4 billion purchase of Time Warner as the U.S. Justice Department said it would not fight an appeals court ruling approving the deal.

Diane Bartz and David Shepardson of Reuters had the news:

The acquisition had been closely watched in political circles after coming under fire from U.S. President Donald Trump, who opposed it because he saw it helping Time Warner’s CNN unit, which he has accused of broadcasting “fake news.”

The three-judge panel on the U.S. Court of Appeals for the District of Columbia ruled unanimously in favor of the deal on Tuesday, saying that the government’s case that the merger would result in higher consumer prices was “unpersuasive.” The decision ended a 15-month effort by the Justice Department to block the deal.

It was AT&T’s second major court victory against the Justice Department, setting the stage for the No. 2 wireless carrier to integrate its WarnerMedia business as well as its new Xandr advertising unit.

“We are grateful that the Court of Appeals considered our objections to the District Court opinion. The department has no plans to seek further review,” Justice Department spokesman Jeremy Edwards said in a statement.

Brent Kendall of The Wall Street Journal reported that it’s one of the biggest losses in Justice Department history:

The decision cements one of the biggest losses for the Justice Department’s antitrust division in a generation. The Justice Department lawsuit, filed in November 2017, was the first major antitrust action under the Trump administration, and the case marked the first time in 40 years the government fully litigated a case challenging a so-called vertical merger that combined two companies that didn’t compete head-to-head.

Tuesday’s loss leaves Trump administration antitrust enforcement at a crossroads, and it could make the department less eager to bring a similarly ambitious lawsuit in the near future. Before the AT&T litigation, the Justice Department had enjoyed a winning streak in merger cases that lasted more than a decade, with each win building momentum and precedent for the next one.

Antitrust observers are now watching closely to see whether the ruling affects the government’s willingness to challenge traditional horizontal mergers between major head-to-head competitors, such as T-Mobile US Inc.’s proposed acquisition of Sprint Corp. , a deal that remains under review at the Justice Department and the Federal Communications Commission.

Brian Fung of The Washington Post reported that the Justice Department faces further issues with no-cost businesses:

That dynamic has been complicated by large tech companies such as Google and Facebook, many of which offer their services free at a massive scale. Antitrust regulators who feel pressured to focus on consumer prices risk making their own jobs more difficult when confronted with zero-cost online services, according to some analysts.

Yet Delrahim has said the Justice Department is adequately equipped to analyze those industries, citing other businesses, such as the broadcast industry, that have historically provided their products to the public free.

“Our long history with zero-price strategies also tells us that we do not need a wholesale revision of the antitrust laws to address competitive concerns in these contexts,” he said in a recent speech. “As I’ve said before, our antitrust laws and principles are flexible enough to adapt to the challenges of the digital economy.”

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

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