WASHINGTON — US District Judge Richard Leon is expected to make a ruling on the controversial AT&T-Time Warner merger, which was opposed by the government for the fear of reshaping how streaming content is delivered and sold to consumers.
AT&T first proposed a merger with media giant Time Warner in October of 2016, which sparked controversy with then-Presidental candidate Donald Trump, who stated the merger is “too much concentration of power in the hands of too few”, and would raise TV prices even higher.
The US government filed an antitrust lawsuit against AT&T in an attempt to block the merger, claiming the proposed merger would hurt competition and would cost Americans millions of dollars more to stream TV shows and movies.
AT&T, however, has stated that a merger with Time Warner is necessary in order to compete with streaming services like Amazon Prime, Netflix and YouTube TV, while advancing streaming technology and offering consumers more choices in terms of content.
AT&T already claims about 28% of American households, largely thanks to its purchase of satellite TV provider DIRECTV, which has made AT&T the largest TV provider in the country.
Over the past six weeks, the trial has seen a number of witnesses testify for the opposing sides, while attorneys showcased the ever-changing dynamics of the media and entertainment enterprise.
The government lobbied that AT&T would gain an unfair amount of power from the deal, which could lead to significant price hikes for cable providers to carry networks owned by AT&T, as company rivals like Charter Spectrum, would have to become AT&T customers in order to gain access to Time Warner content. Carl Shapiro, an economist at the University of California, suggested with a model that American’s cable bills could rise by as much as $500 million annually by 2021.
Although, AT&T’s chief economist Dennis Carlton from the University of Chicago, denied Shapiro’s projection, claiming the model was too complicated.
AT&T’s lead attorney, Daniel Petrocelli said the government failed to provide substantial evidence that the merger would harm competition and raise prices for TV service. Petrocelli suggested the merger could even lower consumer’s TV bills, potentially upwards of $500 million annually.
If the deal is approved outright, major media companies like CNN, HBO, and Warner Brothers, would now be under AT&T’s growing media umbrella.
The judge could also place certain restrictions on AT&T while approving the merger, such as preventing them from acquiring certain Time Warner properties such as CNN, or prevent AT&T from selling DIRECTV to another buyer.
Judge Leon could also completely reject the merger, agreeing with the governments contention that it would be damaging to consumers and competition in the industry.
If the merger gains federal approval, the Department of Justice could file an appeal, which could overturn Judge Leon’s ruling.
Approval of the merger from the federal court could easily open a can of worms with major cable TV providers to start the deal talking to swallow up more entertainment companies, while a rejection could rethink the government’s policy on competition, and could put a damper on pending merger deals, such as 21st Century FOX and Disney, and T-Mobile and Sprint.
