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US Court Rules Against DoJ: AT&T Merger with Time Warner Can go Through

AT&T has received permission to buy Time Warner. The US District Court for the District of Columbia has ruled for AT&T and against the US Justice Department, which had serious reservations against the USD 85.4 billion deal. The department brought its case to court, delaying the merger process. Now that it is over, with no conditions or alleviations put on AT&T, the deal is widely expected to go through, thought the DoJ can still lodge an appeal.

The DoJ expressed disappointment with the court decision and said it continues to believe that the pay-TV market will be less competitive and innovative as a result of the merger. The department will now consider what its next steps will be. AT&T was of course pleased and said it looks forward to closing the merger on or before 20 June.

The DoJ said the takeover threatened competition and could drive up prices for people. The opposing parties, AT&T, Time Warner and DirecTV disagreed, saying the market was in the middle of a revolution facilitated by high-speed internet, producing a “veritable explosion” of new, innovative video content and advertising offerings over the past five years. And now, traditional media organisation are faced with declining video subscriptions and TV ad revenues. The merger would be a way to catch up with the competition, though it would still be chasing “tail lights”: the crux of the matter for the judge was the statement by Time Warner that the combo of Facebook, Apple, Amazon, Netflix and Google (FAANG) are together worth USD 3 trillion. The merged company would by comparison only be worth USD 300 billion.

The judge said the government failed to show how the merger would “substantially lessen competition,” that AT&T will act to harm virtual MVPDS through its ownership of Time Warner content, that AT&T will restrict distributor use of HBO as a promotional tool.

The Communications Workers of America (CWA) congratulated AT&T for its court victory, saying it supports the job creation aspects of the merger. CWA also expects increased investment in its communities through improved services and benefits for consumers.

Consumer group Public Knowledge said the result was “disappointing” and that it expects the government to appeal. – Telecompaper

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