AT&T warns judge that selling off Turner, DirecTV would ‘destroy’ value of Time Warner merger

Time Warner Center. Image courtesy of Time Warner, Inc.
Time Warner Center HQ entrance. (Time Warner Inc.)

AT&T warned Judge Richard Leon, who presided over the Justice Department’s legal challenge to AT&T’s $85 billion acquisition of Time Warner, that selling off Turner or DirecTV as a remedy for approval should not be an option.

In a post-trial briefing, AT&T said that the trial provided no basis for injunctive relief and that “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. On this record, there is no basis to impose any remedies at all, much less divestitures that would destroy the value of the transaction,” AT&T wrote.

Sponsored by Dell Technologies

Whitepaper: How to Elevate Your Content Delivery Workflows With Dell EMC PowerScale

Learn how Dell EMC PowerScale helps meet surging viewer demand while reducing costs with a single centralized platform for the ingest, processing, and delivery of the content your viewers love.

According to Reuters, the DOJ last week asked Judge Leon to consider imposing a partial divestiture on the merger.

RELATED: Turner chief tells judge there's no incentive to withhold networks from rival distributors

AT&T also argued that if the court placed any remedial judgments on the acquisition, the DOJ could then in turn use those remedies as the basis for an appeal.

“The Court should avoid such confusion by simply holding that, as the record overwhelmingly showed, the government failed to prove a violation of Section 7 [of the Clayton Act],” AT&T wrote.

AT&T added that the court should reject the DOJ’s portrayal of Turner’s arbitration commitment as a remedy.

Prior to the trial, AT&T announced that Turner would grant all distributors unilateral rights to invoke arbitration and to preclude Turner from going dark while arbitration is pending, thereby reducing Turner’s post-merger leverage and encouraging the parties to reach a deal before the distributor invokes its rights.

With the trial now officially over, Judge Leon has set a June 12 hearing date for a decision on the matter. General consensus among Wall Street analysts and industry insiders is that AT&T has a fairly good chance of winning the case.

 

Suggested Articles

Alan Wolk, co-founder and lead analyst at TV[R]EV, provides 10 reasons why Discovery+ will succeed.

Antenna, a new startup that provides analytics for subscription-based services, has secured $4.2 million in seed funding from Raine Ventures. 

Warner Bros. traveled a heretofore unthinkable path this week when it said it would send all its 2021 films directly to HBO Max.