US government explains why it is appealing AT&T and Time Warner deal

By AdNews | 10 August 2018

The US Justice Department will argue that the judge who approved AT&T’s $86 billion acquisition of Time Warner “misunderstood” and “failed to apply the foundational principle of corporate-wide profit maximisation" in ruling the acquisition was not anti-competitive.

The government is appealing Judge Richard Leon’s dismissal of its attempt to block the merger.

It will allege that the addition of Time Warner and AT&T’s subsidiary DirecTV, a satellite broadcast service, mean there is a content supplier and distributor relationship that could be used to disadvantage rival cable TV services. For example, it could blackout Time Warner content during negotiations with rivals.

Time Warner includes massive production houses and content companies HBO, Turner, The CW, Warner Bros, CNN and DC Comics.

The government will argue that AT&T would have "both the incentive and the ability to raise its rivals' costs and stifle growth of innovative, next-generation entrants that offer attractive alternatives to AT&T/DirecTV's legacy pay-TV model—all to the detriment of American consumers."

AT&T said the idea it would blackout Time Warner content would hurt its business model that relies on subscriber fees and advertising.

The appeal’s final briefs are due this October with a final ruling likely before February 2019.

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