Demand for DirectTV or Turner divestment could lead to no deal: AT&T

Judge Richard Leon is expected to take a decision on the proposed merger by June 12.

As per a court filing, AT&T wants a federal judge to reject any request by the U.S. Justice Department which compels it to divest its DirecTV unit or Turner networks as part of its proposed $85.4 billion acquisition of Time Warner Inc.

The reporting of the closing briefs from both sides marks the end of the trial over the deal which took on a political color following its announcement in October 2016.

A frequent critic of the Time Warner CNN network, U.S. President Donald Trump had attacked the deal during the U.S. Presidential election campaign trail and vowed that as President, the Justice Department would block the deal.

Last week, an attorney from the Justice Department attorney asked Judge Richard Leon to consider putting a rider on the deal that requires that AT&T make a “partial divestiture.”

The Justice Department had urged AT&T last year to divest either DirecTV, the largest pay TV company with more than 20 million subscribers, or TimeWarner’s Turner networks because the government said AT&T could use Time Warner content as a “weapon” to raise prices. As a result, the Justice Department wants divestitures and has argued that ATT would have the ability to raise prices on Time Warner content for pay TV rivals.

“Divestitures here would destroy the very consumer value this merger is designed to unlock. Divesting DirecTV would eliminate the price decrease for millions of DirecTV consumers predicted by the government itself, and divesting Turner would eliminate the content innovations and the advertising benefits that put downward pressure on Turner prices,” said AT&T in a court filing.

Judge Richard Leon is expected to decide by June 12 on whether to approve the merger.

According to the Justice Department, the merger is illegal since consumers would be forced to pay up more for access to TV content; for AT&T and Time Warner, the deal is important since it will enable the combined company to compete with internet and video streaming companies, including Netflix Inc and Facebook Inc and Netflix Inc.

“The government did not even begin to make a credible case that the merger would likely harm competition, substantially or even just a little,” said AT&T in its closing brief. “This is not a close case. The government failed to meet its burden for multiple independent reasons.”

Late on Thursday, the Justice Department’s final brief was filed under seal and a redacted version has yet to be made public.

During the trial, Judge Leon, had asked witnesses several times whether they felt any inadequacy in the arbitration proposal.

Earlier, Leon had rejected AT&T’s request to force the Justice Department to hand over records that could shed light on whether Trump pressured the Justice Department to try to block the deal.

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