Here’s what you need to know about the U.S. lawsuit against the AT&T-Time Warner merger

Source: 
Author: 
Coverage Type: 

AT&T and Time Warner plan to merge in a $85 billion deal that would unite one of the largest distributors of content with one of the biggest producers of content, a roster that includes hits like HBO’s “Game of Thrones,” the Harry Potter films and major cable franchises like CNN. But not if the Justice Department has its way. The U.S. government has sued to block the deal, a move that some fret is actually political reprisal for CNN’s reporting on President Trump. The trial begins on Wednesday, March 21. 

What are the stakes for AT&T and Time Warner? Time Warner could lose out on $85 billion — which would go to its shareholders, including to executives. If the court rules against the acquisition, it might chill other media mergers in the works. Disney plans to buy Fox’s entertainment business and CBS and Viacom are working on a merger. There’s also Comcast’s bid for European pay TV operator Sky, a deal that appears to be designed to spoil Disney’s play for Fox.

The potential second part of the case: The judge could wholly find in favor of the government and block the merger altogether, or he could find the government failed to prove its case and let the merger go through. There is a third option: If Judge Leon finds that the merger is anticompetitive, he could still let the deal go through with conditions or remedies to address anticompetitive concerns. Which would bring us to the potential second part of the case.  The Justice Department will likely argue that no conditions should be allowed, since 1) any conditions would do nothing to curb consumer harm, and 2) even if some rules proved useful, it would be far too costly for the government to monitor. AT&T will argue it has already made a pretty big promise — to not black out any Time Warner channels in any future disputes for a period of seven years, with any disagreements subject to third-party arbitration. In other words, with that promise, AT&T has effectively already built in a key condition. The judge could also apply his own prescriptions to the merger, but even then he would only do so very narrowly. And if he does, he may work off the decree from the Comcast-NBCUniversal merger over which he presided.


Here’s what you need to know about the U.S. lawsuit against the AT&T-Time Warner merger