US DoJ appeals AT&T/Time Warner verdict

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The US Department of Justice is appealing the June 12th decision by a US District Court judge that cleared the merger of US telco giant AT&T and entertainment conglomerate Time Warner.

At the time, US district judge Richard Leon said the government’s objections “rested on improper notions” and warned against an appeal. “I hope the government has the wisdom and courage [not to seek a stay]”, he said.

The ruling came some 20 months after AT&T first announced its plans to buy Time Warner in a transaction then worth almost $85 billion (€72.3bn).

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” said David McAtee, AT&T General Counsel. “While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DoJ has chosen to do so under these circumstances. We are ready to defend the Court’s decision at the DC Circuit Court of Appeals,” he confirmed.

Craig Moffett of analyst firm MoffettNathanson says the firm is not as sure as everyone else that Judge Leon’s ruling will be upheld on appeal. “That’s not just because the DC Circuit Court of Appeals has a reputation as a reasonably liberal Court (although it does). Instead, it’s because there is actually a reasonable argument to be made here,” he suggests.

“If there is a single thread that runs through every page of Judge Leon’s 172-page decision, it is this: Judge Leon rejected on its face the premise that a programmer (Turner) that is owned by a distributor (AT&T) would even take into account the economics of the total company, and that they would negotiate even a little bit differently as a result. Pull on that one thread and the whole sweater, er, decision, unravels,” he notes.

“None of this is to suggest that the DoJ will win on appeal, of course. One would have to assume that the odds are actually relatively low. But they are not zero. And, if we’re right that the DOJ’s appeal will focus principally on Judge Leon’s rejection of the integrated-company premise, well… there is at least a reasonable basis for the appeal,” he suggests.

“The AT&T-Time Warner transaction is a bad deal for consumers and competition,” declared John Bergmayer, Senior Counsel at public interest group Public Knowledge. “Since it has gone forward, AT&T has already raised prices for its DirectTV Now video service, more than doubled the mysterious ‘administrative fee’ it tacks on to most of its wireless bills, and raised the price of some of its wireless plans while removing the HBO subscription that it had previously included. Judge Leon’s decision contained numerous errors, and we believe the DoJ’s position should be vindicated.”


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