On Thursday, the U.S. federal government came close to appealing the AT&T and Time Warner merger. The merger was approved by a federal judge around a month ago, and both companies moved forward quickly to finish their merging. The judge who approved the merger actually discouraged the government from appealing the decision.
The deal included an $85.4 billion agreement, which caused many to become concerned.
The federal government argued that if the merger were to go through, AT&T would become much too large. The company’s size would be unhealthy for both its competitors and its consumers. Through the merger, AT&T would acquire all of Time Warner’s properties, and would thus control a huge part of the entertainment industry. Time Warner’s properties include Warner Bros. Entertainment, CNN, Adult Swim and HBO.
AT&T’s supporters stated that the merger was only fair, as without it they would struggle to compete with companies such as Netflix, Facebook, and Amazon.
When stating his opinion in his ruling, the federal judge wrote:
If there ever were an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one.”
Conversations regarding the government’s appeal were present before the merging even took place. The government’s decision to file a notice of appeal goes to show that they do not plan to take mergers like this one lightly. Many have praised the government’s appeal, as other companies could start working on mergers in order to compete with AT&T.
AT&T’s special counsel responded after the notice, stating:
The court’s decision could hardly have been more thorough, fact-based, and well-reasoned. While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the D.O.J. has chosen to do so under these circumstances.”
Strangely, the federal government approved the Disney-21st Century Fox merger. In a $71.3 billion deal, Disney purchased Fox’s television and movie rights. This deal was approved by the federal government merely six months after it was proposed.
The federal government has not explained its reasoning behind appealing the AT&T-Time Warner merger. Many believe that the government’s appeal will not be approved, as the federal judge who initially approved the merger seemed to be rooting for AT&T.
This situation has become very concerning for analysts of the entertainment industry. Because AT&T is set to control so many properties, it is safe to assume that the company will attempt to both create content and distribute it themselves via their own streaming platform.
This is an issue when one considers that AT&T will soon have the rights to the DC Cinematic Universe, Harry Potter, LEGO, and several horror movie franchises. An AT&T-exclusive streaming platform would prevent this content from being distributed elsewhere, including distribution to television networks. If AT&T were to create a platform for its content, they would create one which would arguably be more desirable than Netflix or Hulu, which would give the company the opportunity to offer its platform at a higher price.
Featured Image via Wikimedia Commons
