Thoughts on the legality of the AT&T & Time Warner INC merger.

Post date: Nov 12, 2017 12:1:12 AM

    The AT&T Time Warner merger should have received the Department of Justice's blessing months ago, yet we are here in November and the DOJ has not. What happened? Some view the merger as giving too much power to one company or as a way for the President's Justice Department to get revenge on CNN (a part of Turner Broadcasting which is owned by Time Warner INC). Both of those are wrong. The merger would not give too much power to AT&T. Recent history shows this as the nation's largest cable company Comcast purchased NBC Universal in 2009. It was also a vertical merger. So what's a vertical merger? A vertical merger is when a company buys a company that provides goods to the company. NBC Universal provided content to Comcast, just as Time Warner provides content to AT&T. I also do not think the merger is being held up as a way to get back at CNN. I think the issue is that the President's appointee to head the antitrust division Makan Delrahim was barely confirmed by the Senate at the end of Septemeber, so Mr. Delrahim has had a little over a month to understand the DOJ's stance on this merger. Current rumors say that the DOJ now wants AT&T to sell Turner Broadcasting or DirecTV. Turner Broadcasting consists of TNT, TBS, TruTV, Cartoon Network, Bleacher Report, CNN and more. DirecTV is an AT&T subsidiary that consists of a satellite tv business, a streaming service, an international satellite tv business and a few pay tv channels. This should not be considered anti-competitive as AT&T is not buying a competitor, so the DOJ should do what it did to the Comcast NBC Universal merger. In that case, the DOJ and the Comcast agreed to some behavioral provisions as a result of the deal. The DOJ should do that to this merger too. If the DOJ foolishly decides to block this merger in court, they will fail. Vertical mergers have rarely failed and antitrust review. AT&T has been preparing for litigation for over a year while the DOJ has only recently looked into litigation. I hope the DOJ applies behavioral provisions to this deal while they still can. If they lose in court, they cannot apply any behavioral provisions. For those interested, I have attached the Department of Justice's Antitrust Division Manual and linked the guidelines for non-horizontal mergers below. https://www.justice.gov/atr/non-horizontal-merger-guidelines

    Update: As I and industry analysts have predicted: a US District Court ruled in AT&T's favor and allowed the merger to proceed. The companies started their merger with the court's blessing last summer.