AT&T and Time Warner Finally Allowed to Merge

An appellate court has turned down a bid from the United States Department of Justice to overturn a ruling that had opened the door to AT&T acquiring Time Warner.  The US Court of Appeals three-judge panel for the DC Circuit capped this decision to mark the end of the second round of this now protracted legal fight between the cable and communications provider and the Department of Justice.  The Justice Department could still opt to ask for the entire appeals court to hear the case, or they could appeal the ruling up to the Supreme Court. 

You may recall that AT&T had first announced the intention to buy Time Warner—a company which includes cable networks like HBO, Turner, and Warner Bros—in October of 2016.  A year after the announcement, the US Department of Justice sued over antitrust concerns and stopped the deal, with a claim that ownership of Time Warner would give AT&T “both the incentive and the ability to raise its rivals’ costs and stifle growth of innovative, next-generation entrants.”

But the companies both defend the merger, arguing during the trial that they actually do not have any incentive to trigger a blackout because that would stifle memberships and they rely heavily on both subscriber fees and live advertising to turn profit.  Thus, they argue, dropping any distributor would bring financial harm. Furthermore, they attest, such a merger would help them to better compete with online giants like Netflix, Google, and Facebook.

Originally, US District Court Judge Richard Leon ruled that the merger could continue, requiring no conditions for the plan.  As soon as the decision was made, AT&T quickly closed the deal and changed Time Warner’s company name to WarnerMedia. At the same time, AT&T confided to the DoJ that it would maintain both the Turner and AT&T names as separate businesses, with a firewall between them until the end of February (or at the conclusion of an appeal, should there be one). 

Sure enough, the DoJ appeals that Leon made “fundamental errors of economic logic and reasoning [and] discarded the economics of bargaining.”

After much more back and forth, though, the appellate court finally retracted and is now allowing for this AT&T and Time Warner (WarnerMedia) merger to finally commence.