Time Warner: Political ‘Motivation’ Was Behind Antitrust Lawsuit

Pawns on a chessboard

Pawns on a chessboard

AT&T won approval from a United States court on Tuesday to buy Time Warner for $85 billion, without conditions, allowing AT&T to compete with Internet companies that dominate digital advertising and providing new sources of revenue.

Gary Ginsberg, 's executive vice president, said in a statement that U.S. District Judge Richard Leon's "resounding rejection of the government's arguments is confirmation that this was a case that was baseless, political in its motivation and should never have been brought in the first place".

Analysis - The global media landscape may be in for a major shake-up in the wake of the approval of a mega-merger betweem telecoms giant AT&T and media firm Time Warner.

It will bring together AT&T's significant wireless, satellite television and internet business with Time Warner's media properties, which include HBO and CNN.

AT&T and Time Warner's lead lawyer, Daniel Petrocelli, said outside the courthouse that the companies were gratified and relieved. The "drop dead" deadline for the merger to be completed is June 21.

Cornell law professor George Hay added that the ruling found the government's evidence lacking, rather than a broader determination of how vertical mergers affected competition.

Deal bonanza: Other telecom companies like Comcast, which has been stalking 21st Century Fox's TV operations, and Verizon, which combined Yahoo and AOL into media division Oath, could now bid for more content businesses in order to compete with huge digital platforms like Amazon and Netflix.

All of those deals would unite companies in different parts of an industry's supply chain. The sheer scale of the deal is what led the Justice Department to file an antitrust lawsuit to try to prevent the merger. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news".

Judge Leon rejected that argument earlier this year.

"I conclude the government has failed to meet its burden to establish that the proposed transaction is likely to lessen competition substantially", the judge wrote in his opinion.

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Judge Leon said the United States failed to prove the merger would give Time Warner increased power to negotiate fees for its content. He rejected testimony by distributors who said they were anxious Turner would be able to raise prices.

"Common sense tells you that this degree of concentrated power isn't right", wrote Zephyr Teachout, a candidate for attorney general of NY, wrote immediately following the judge's ruling.

AT&T had initially sought to argue that the government's opposition was fuelled by political objections from US President Donald Trump, who criticised the takeover during the 2016 election campaign. He vowed that his administration would oppose it, and as president, he has relentlessly attacked CNN for its news coverage.

There was also concern that the federal lawsuit might be politically motivated.

Tuesday's ruling signaled that federal regulators will have a hard time stopping companies from getting bigger by gobbling up rivals and the programming they own. "I think we'll see now that companies will be much more confident about vertical mergers", he added, referring to deals where a company merges with a supplier.

"This was a defining case for antitrust enforcement in the United States", former Justice Department antitrust attorney Ketan Jhaveri said. Leon's ruling raises the question of whether Delrahim can successfully maintain that stance.

The Justice Department had sued to block the AT&T-Time Warner merger, citing anti-competitive reasons and violation of antitrust laws.

Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge Leon of the US District Court for the District of Columbia rejected their bid to force the disclosure of White House communications that might have shed light on the matter.

The government estimated costs to industry rivals, such as Charter Communications, would increase by $580 million a year if AT&T owned Time Warner.

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