How the AT&T-Time Warner Merger Affects Consumers

AT&T completes its acquisition of Time Warner		
		
	Jon Russell

       @	   
   	7 hours

AT&T completes its acquisition of Time Warner Jon Russell @ 7 hours

The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically risky as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint. Specifically, on future deals of this type. A loss for AT&T and Time Warner could have signaled a new era of government scrutiny over so-called "vertical mergers" and could have halted attempts by companies like Disney, Fox and Comcast to announce their own megadeals. After all, Netflix and Amazon are already vertically integrated. "For AT&T and Time Warner, this is a major victory lap".

The Time Warner deal is a crucial achievement for Stephenson, who views AT&T as competing with Google, Facebook, Netflix and other Silicon Valley giants.

The government anxious that AT&T, as DirecTV's owner, could charge Comcast and other rival distributors higher prices for Time Warner channels like CNN or HBO.

Wayne Crews of the Competitive Enterprise Institute said the government's case ignores the technology which is rapidly changing the media sector.

Experts have said that the DOJ attorneys may have been somewhat hamstrung by the fact that AT&T's acquisition of Time Warner is somewhat unusual.

Amid the shifting media sands is a backdrop of intense competition in the wireless business.

But Salil K. Mehra, a professor at Temple's Beasley School of Law and an expert on antitrust, said "this is a courageous new world in which leverage issues and the data collection on individuals make it harder to predict what will happen".

While the motive behind the challenge to AT&T's deal may never be known, Blair said politicizing the process would be "extremely unsafe for the country".

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. However, we remain on the sidelines as we believe: "1) T may need to accelerate investment in Time Warner (TWX, Hold) content; 2) advertising benefits/opportunities may take longer to materialize; and 3) risks to standalone EPS guidance remain", Janedis wrote in a research note.

We still don't know who will ultimately emerge victorious from this transaction, but it nearly certainly won't be consumers. The Department of Justice, with the support of President Donald Trump, opposed the merger, arguing that the combined companies would be too powerful and reduce competition. The cable provider planned to approach Fox investors and has told the Justice Department of its interest, an early step in addressing potential antitrust concerns, according to a person familiar with the matter.

The Justice Department, which had sued to block the purchase, has the option of appealing the decision. Sessions did not comply with the request. The government alleged that by owning Time Warner, AT&T would have too much leverage in negotiations with television distributors, which would hurt competitors, harm innovation and could lead to increased cable prices for consumers.

To assuage the Trump administration's criticisms, AT&T offered to submit pricing disagreements with other pay TV companies over Turner's channels to third-party arbitration.

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