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Drama Awards 2019

US gov’t appeals AT&T’s Time Warner deal

Properties such as Game of Thrones are due to come under AT&T control

The US government is to appeal the recent ruling that gave the go-ahead for telecoms firm AT&T to complete its US$85.4bn acquisition of Time Warner, parent company of Warner Bros, HBO, Turner and CNN.

The US Department of Justice (DoJ) has been involved in a long-running battle to stop the takeover, which it argues will result in higher prices and less competition.

The case appeared to have been settled last month when a federal judge made a landmark ruling allowing the takeover to progress, with AT&T subsequently closing the deal.

However, the DoJ has now said it is appealing that ruling, but has not given details on what grounds.

David McAtee, AT&T’s general counsel, said the company would be defending the initial decision and admitted being surprised by the DoJ’s decision to appeal. “The court’s decision could hardly have been more thorough, fact-based and well reasoned,” he said.

Donald Trump said he opposed the deal prior to his election as US president, while consumer groups have also voiced concerns over a concentration of power.

The DoJ had claimed AT&T, which owns satellite TV platform DirecTV, could end up charging rival distributors more for Time Warner content, resulting in higher prices for consumers.

But Judge Richard J Leon of the US District Court in Washington said the DoJ had failed to prove its argument that the acquisition would lead to fewer choices for consumers and higher prices for TV and internet services.

Instead, he accepted the position of AT&T and Time Warner execs: that content creation needed to be increasingly married with distribution for media companies to survive in a world dominated by tech giants.

The landmark case saw Leon reject the lawsuit brought by the US government last November to block the deal. Significantly, the judge cleared the way for a takeover without imposing any conditions on AT&T, such as the sale of DirecTV or Time Warner’s cablenet operator Turner.

At the time of his ruling, the judge wrote that he did not believe “the government has a likelihood of success on the merits of an appeal” were it to consider one.

“I hope and trust that the government will have the good judgement, wisdom and courage to avoid such a manifest justice,” he wrote. “To do otherwise, I fear, would undermine the faith in our system of justice of not only the defendants [AT&T and Time Warner], but their millions of shareholders and the business community at large.”

The decision was widely expected to open the gates to a flurry of high-level M&A activity, in particular paving the way for the conclusion of the ongoing battle between Comcast and Disney for 21st Century Fox.

The AT&T deal sees the telco taking ownership of Time Warner’s principal divisions: premium cablenet HBO, channel operator Turner and studio Warner Bros, which includes film and television divisions. Within Turner, AT&T will own all cable properties, including TNT, TBS, Cartoon Network and CNN.

HBO’s premium programming, including crown jewels Game of Thrones and The Sopranos, will also come into AT&T’s possession. Additionally, the telco will acquire Time Warner’s 10% share of streamer Hulu.

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