CNBC - Federal judge clears AT&T's $85 billion bid for Time Warner with no conditions
AT&T announced that it was buying Time Warner for $85.4 billion in October 2016.
The Justice Department sued last year to block the merger, citing concerns that AT&T, owner of satellite television provider DirecTV, could charge rival distributors more for Time Warner content, resulting in higher prices for consumers.
The outcome of the trial could have implications for future deals in the telecom and media industries, as well as vertical mergers, where companies combine with their suppliers.
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What I wrote at the Wall Street Journal:
The government wasted everyone's time. They should be ashamed of themselves.
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AT&T now owns CNN, the news website that makes President Fucktard Trump cry. Most likely this waste of time trial was because of Trump. Fuck you Trump.
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Somebody else wrote "Not a good day for Trump, who tried--lawlessly--to scotch this deal because of a personal animus for CNN--i.e., Time-Warner. Not exactly a business or shareholder-friendly stance."
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AT&T: "We compliment our colleagues at the Department of Justice on their dedicated representation of the government."
Translation: Fuck you Department of Justice. We won. You lost. You people are fucking idiots.
AT&T applauds decision, looks to close on Time Warner by June 20
In its first statement on its landmark victory, AT&T (NYSE:T) says it applauds the decision and is pressing for a quick closing of its $80B-plus buyout of Time Warner (NYSE:TWX).
“We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner," General Counsel David McAtee says.
"We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”
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New York Times - AT&T’s Time Warner Takeover Wins Judge’s Approval in Defeat for Justice Dept.
A merger between AT&T and Time Warner would create a media and telecommunications powerhouse, reshaping the landscape of those industries.
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I'm going to read this thing:
U.S. District Court Judge Richard Leon - his 200-page opinion
I read enough of it. It was extremely well done. This is a brilliant judge.
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BBC News - Judge clears AT&T takeover of Time Warner
A US district court judge has cleared the merger of telecoms giant AT&T and media firm Time Warner, in a major defeat for government regulators.
The US had sued to block the deal, arguing that it would reduce competition in pay TV and lead to higher prices for consumers.
But Judge Richard Leon rejected those arguments, approving the deal without conditions.
The ruling is expected to lead to other mergers and acquisitions.
The lawsuit against AT&T had sent a signal that the Trump administration's Department of Justice was taking a more hardline stance on such mega-deals.
Analysts say the decision will bolster firms such as Comcast - which is considering bidding for 21st Century Fox assets, including its stake in Sky, in a challenge to a deal announced between Fox and Disney last year.
'Relieved'
Judge Leon's decision comes more than 18 months after AT&T announced in 2016 its plans to buy Time Warner in a transaction then valued at about $85bn.
The deal is set to unite AT&T's significant wireless, satellite television and internet business with Time Warner's media properties, which include HBO and CNN.
Attorney Daniel Petrocelli, who represented AT&T, said the firm expects to complete the transaction before 21 June.
"We're disappointed that it took 18 months to get here, but we are relieved that it's finally behind us," he told reporters after the decision.
The argument
The case comes as the growth of online firms like Amazon and Netflix have scrambled traditional lines of competition, spurring consolidation and prompting concerns about monopolies.
AT&T said the acquisition would give it access to content and advertising heft that would help it compete with online streaming firms, which have led to declines in pay-TV subscribers.
Government lawyers had argued that the takeover would hurt innovation and allow AT&T to charge rival providers more for its must-have content - costs that would ultimately be passed on to consumers.
During the trial, they urged the court to block the deal or require the sale of certain businesses as a condition of approval.
Lower prices?
Judge Leon said the US failed to prove the merger would give Time Warner increased power to negotiate fees for its content.
He added that the evidence presented at trial showed the deal would probably reduce prices for AT&T customers, without leading to greater costs for subscribers of other services.
Judge Leon also said it would be "unjust" for the Justice Department to seek to put a hold on the deal pending an appeal.
Assistant Attorney General Makan Delrahim said the Justice Department was "disappointed" by the decision, but did not say if it planned to appeal.
"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," he said in a statement.
"We will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers."
The AT&T lawsuit is the first time in decades that a government challenge of a "vertical merger" - involving two companies that do not directly compete - has gone to court.
Open Markets Institute, an activist think tank that opposes corporate consolidation, said the ruling was a "big loss for the public" and would lead to an effective duopoly for TV distribution.
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.
Judge Leon rejected that argument earlier this year.
After the decision, Mr Petrocelli said: "We were surprised when the case was brought and as I said in closing arguments, it's a case that never should have been brought."
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New York Times - Why the AT&T-Time Warner Merger Is a Win for Consumers
By Stephen Moore
June 13, 2018
A federal judge’s ruling on Tuesday to greenlight the merger between AT&T and Time Warner is a big boost to the competitiveness of the American economy and an even bigger win for consumers and shareholders. The decision was also a total slapdown of the antitrust division of the Justice Department, which sees monopoly bogeymen around every corner.
The Justice Department must now decide whether to appeal the judge’s ruling, a move that would be sheer folly and a waste of taxpayer money, given the firm rejection of every argument the government’s lawyers made. Hopefully, this decision will also clear the path for other planned cost-cutting mergers in the media and telecommunications industries.
The government’s antitrust challenge to this $85 billion deal was one of the flimsiest assaults against a corporate merger in recent memory. These two companies don’t even directly compete with each other. Normally, antitrust cases are brought to block so-called “horizontal” mergers, in which companies in the same line of business — two airlines, for example — want to combine forces. Even in such instances, the antitrust laws are antiquated, given that globalized competition and the speed of technological change continually knock down industry leaders.
The core argument brought by the Justice Department, in an antitrust action championed by President Trump, was that AT&T could use its new market power to raise prices exorbitantly on cable and satellite operators that want to run Time Warner TV programs — such as CNN broadcasts or HBO shows. The government’s lawyers argued that consumers’ cable bills would go up if the merger went through.
The absurdity of this argument is that the Justice lawyers seemed to be stuck in the 1980s. In 2018, the number of American households getting their television or video entertainment from traditional cable providers is declining. The very notion of “watching TV” is becoming as obsolete as listening to music on a turntable. My teenage kids and their friends don’t even own TVs. They watch “Game of Thrones” on their computers or smartphones, and one of their favorite “channels” is YouTube. They can choose from thousands of programs at a very low cost. Today, any hotshot with a camera and a Facebook page can be a media company. Is that enough competition for the Justice Department?
In short, there is probably no area in today’s economy where there is less threat of monopolistic power than in media and entertainment. The proliferation of video content and ways to get it means that these companies must stay innovative and affordable, or they are gone as fast as you can say Blockbuster Video.
In this cutthroat environment, the AT&T and Time Warner merger is better described as a survival strategy, not a market domination plot. The companies hope to lower costs by merging AT&T’s transmission of video content with the entertainment products that Time Warner offers.
This merger could bring welcome competition to Google and Facebook, which have captured about two-thirds of the online advertising market, a point that the Justice Department’s lawyers ignored. Combining AT&T’s mobile, broadband, and DirecTV platforms with Time Warner’s movies, TV shows, music and sporting events could turn them into a serious rival to the tech behemoths.
Businesses and families may also benefit from the merger if it accelerates the development of 5G wireless networks. The merged company could use its vast spectrum of resources to jump-start the delivery of Time Warner content through AT&T’s wireless network. This will mean new competition for residential broadband from cable companies such as Comcast.
The days when companies like U.S. Steel or General Motors or Microsoft could accumulate the market power to dominate an industry and gouge consumers with higher prices are long gone. Some of the most powerful companies in the world — Amazon and Walmart, for example — do just the opposite: they are constantly lowering, not raising their prices.
It is too early to know whether this mega-deal will turn out well for shareholders and consumers. But the Justice Department should not be standing in the way. Its goal, instead, should be to allow made-in-America companies like AT&T and Time Warner to do what it takes to become global competitors, not global dinosaurs.
The Trump administration should be thankful that, in this merger, it isn’t China buying up America’s strategic companies or assets. These are two American companies merging to gain profitability and global market share. In this way, the merger helps put America first. Someone, please tell the lawyers.
Stephen Moore is a fellow at the Heritage Foundation’s Project for Economic Growth.
Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.
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What I wrote at the Wall Street Journal:
"Well, that was a rout. Federal Judge Richard Leon on Tuesday gave the Justice Department a much-needed kick in the shins by greenlighting AT&T ’s merger with Time Warner without conditions."
I like this judge. "Without conditions". Wonderful.
The Justice Department should be ashamed of themselves. Look at the money and time they wasted.
This whole thing is Trump's fault. Drop dead Trump.
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Wall Street Journal - Justice’s Antitrust Humiliation
Judge Leon blows away the government’s case against the AT&T-Time Warner merger.
By the Editorial Board
June 12, 2018
89 COMMENTS
Well, that was a rout. Federal Judge Richard Leon on Tuesday gave the Justice Department a much-needed kick in the shins by greenlighting AT&T ’s merger with Time Warner without conditions. President Trump’s antitrust chief Makan Delrahim should reflect long and hard on how the government so misjudged the law and the media marketplace.
The Justice Department last November sued to block the $85 billion deal on the dubious theory that the combined company would hinder competition by forcing competitors to pay hundreds of millions of dollars more per year for Time Warner’s “indispensable” programming. If rivals refused, AT&T could supposedly withhold its content and grab rivals’ customers.
The theory ignores the “tectonic changes” in the media and broadband markets, as Judge Leon explained in his 172-page analysis. “Generic statements that vertical integration ‘can’” lead to “‘an unfair advantage over its rivals’ do not come close to answering the question before the Court,” he added.
Lo, video subscriptions are declining while TV ad revenues have plateaued. Consumers are “cutting the cord” from cable and buying cheaper alternatives over the web. Facebookand Google’s digital ad platforms have surpassed TV advertising in revenue. Google’s YouTube boasts 1.8 billion registered monthly viewers, which is 72 times as many as AT&T’s TV subscribers.
The last time Justice went to court to stop a vertical merger was 1977, and it lost. Unlike with horizontal mergers between direct competitors, the government must prove that a vertical deal would reduce choice and harm consumers. Yet Justice couldn’t show how a combined AT&T-Time Warner would pose any more of a threat to competition than these other vertically integrated companies.
Government lawyers relied heavily on testimony by a University of California, Berkeley professor, but several economists disputed his models and Judge Leon said he largely agreed with their critiques.
The government also cited expert testimony from AT&T competitors. But “in the final analysis, the bulk of the third-party competitor testimony proferred by the Government was speculative, based on unproven assumptions or unsupported—or even contradicted—by the Government’s own evidence,” Judge Leon noted.
To significantly increase market share, AT&T would have to withhold content from most competitors, which would reduce Time Warner’s $31 billion in annual advertising and subscription revenue. This would be self-defeating. A major goal of the merger is to monetize customer data as YouTube and Facebook do.
Judge Leon also pointed out that Comcast ’s acquisition of NBCUniversal in 2011 did not cause content prices to increase. And Justice couldn’t explain why or how conditions imposed on that merger failed to prevent anti-competitive conduct. Thus, the government “failed to meet its burden to show that the proposed merger is likely to substantially lessen competition,” Judge Leon concluded.
Justice could have accepted AT&T’s offer to arbitrate content fees, yet it refused to settle for anything short of divestiture of Turner Broadcasting. Bad call. President Trump famously opposed the merger during the 2016 campaign, but hostility to CNN isn’t a legal argument.
Judge Leon has wisely refused to stay his ruling if the government appeals since Justice has already delayed the deal’s closing by 18 months. Mr. Delrahim should avoid another humiliation by conceding defeat and walking away.
Appeared in the June 13, 2018, print edition.
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