WASHINGTON — A federal appeals court has cleared AT&T’s takeover of Time Warner, rejecting a challenge from the Trump administration by saying it failed to prove that the $81 billion merger won’t harm consumers or competition in the pay-TV market.
The Justice Department antitrust attorneys also had asserted that Leon misunderstood the complexities of the pay TV market and the nature of AT&T’s competitors.
The idea behind the merger was to help AT&T — which claims about 25 million of the 90 million U.S. households that are pay TV customers — compete better with nimble rivals born on the internet like Netflix, YouTube and Hulu.
Soon after the deal closed, AT&T launched WatchTV, a $15-a-month streaming service that offers more than 30 TV channels, including the Time Warner channels TNT and TBS (Turner Broadcasting).
AT&T has asserted the merger will save it money on content from Turner Broadcasting, enabling it to reduce charges to its DirecTV customers by at least $78 million a year.
The case could affect the future course of antitrust regulation.
Already, Leon’s ruling opened the floodgates to deal making in the fast-changing worlds of entertainment production and distribution.
Just a day after his decision, Comcast jumped back into a bidding war with Disney for most of 21st Century Fox’s TV and movie businesses. Disney eventually won, and Comcast bought British broadcaster Sky instead. Wireless carriers Sprint and T-Mobile also are attempting to combine; the Justice Department and the Federal Communications Commission are still reviewing that deal.
When the AT&T-Time Warner deal was first made public in October 2016, it drew fire from then-candidate Donald Trump, who promised to kill it “because it’s too much concentration of power in the hands of too few.” Trump has publicly feuded with Time Warner’s CNN, calling it “failing” and a purveyor of “fake news.” The president’s statements didn’t come up during the trial in district court, though his antipathy loomed in the background.