Invoking a real-life Game of Thrones of sorts today and asking the Department of Justice to graciously accept its defeat, a federal judge put it concisely that the government “failed to carry its burden to show that the merger of defendants AT&T and Time Warner, as reflected in the October 22, 2016 merger agreement, is likely to ‘substantially . . . lessen competition.”
Or, rejecting the antitrust theories of the DOJ, as US. District Judge Richard Leon also said in the memorandum accompanying his long-awaited approval of the $85 billion corporate marriage: “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. Small wonder it had to go to trial!” (read it here)
Leon’s ruling reflects his impatience with the length of the process and, on nearly every one of its 172 pages, his exasperation with the government’s case. Its assertion that a combined AT&T and Time Warner could manipulate HBO promotions such as DirecTV Now’s current $5-a-month offer, is based on a “gossamer-thin thread” of logic, he groused. In another section of the opinion, he wrote that he would “give little credit to blanket statements by third-party competitor witnesses. Their statements “were largely unaccompanied by any sort of factual analyses or, worse, contradicted by real-world examples from the witnesses themselves.”
Strikingly, Leon throughout the opinion entirely embraces the contention of AT&T and Time Warner that the traditional TV business is under siege and the merger is an effort to level the playing field with tech giants. Two traditional companies whose public stance on cord-cutting just two or three years ago had their laments about the decline of traditional video subscriptions validated by one of the highest courts in the land. “The video programming and distribution landscape has continued to evolve at a breakneck pace,” Leon affirmed.
Though the merger plan was announced in October 2016, the filing of the government’s November 2017 lawsuit on the basis it would hinder consumers and competition hit the halt button that pivoted to the six-week trial earlier this year.
“The parties have waged an epic battle, under extremely restricted deadlines, to litigate and try this historic vertical merger case,” the DC-based judge declared as he continued the dramedy tone in his dense 172-page memo, that included cameos by HBO promos, DirecTV pricing, multichannel video distribution, Netflix, Hulu and Amazon, among many others. “Each side’s evidence and theories have been subjected to cross-examination and the rigors of the Rules of Evidence and Civil Procedure,” Leon added as the media landscape prepares for big moves all round as a result of Tuesday’s decision. “It has been a herculean task for all the parties and the Court. Each side has had its proverbial day in Court. The Court has now spoken and the defendants have won.”
With electronic devices taken at the federal courtroom door, windows draped and a more than 15-minute monologue from the bench today, Judge Leon ripped the Department of Justice from the bench and later on paper.
“In this Court’s judgment, a stay pending appeal would be a manifestly unjust outcome in this case,” the judge made a point of asserting on Tuesday, as the red faced DOJ contemplated once more attempt at putting the brakes on the deal. Any stay would actually do the work of killing the merger that the trial didn’t do as there is a June 21 deadline that is scheduled to kick in. A consumation deadline that if missed would not only break-up the merger but force AT&T to have to pay a $500 million fee to Time Warner.
Right now the DOJ’s Antitrust Division boss Makan Delrahim are only saying that they “are going to review the opinion and take the next steps as necessary.”
“If the Government were to ask me to stay this Court ‘s ruling, I would, under the law, have to weigh whether the Government has a strong likelihood of success on the merits and would suffer irreparable harm should the stay be denied, among other things,” the George W. Bush appointee said in his ruling “Well, suffice it to say – as my 170-plus page opinion makes clear – I do not believe that the Government has a likelihood of success on the merits of an appeal. And in my judgment, given that our Circuit Court has never hesitated to unwind an unblocked merger if the law and facts warrant doing so, there would be no irreparable harm to the Government – only to the defendants – if my ruling were stayed.
“As such, I could not, and would not, grant such a stay in the first instance,” Leon threw in as a kicker to Jeff Sessions’ gang.
Additionally, free of any conditions like those that the same judge draped over the 2011 acquisition of NBCUniversal by Comcast, Leon also today knee capped the theories postulated on the vertical merger by the government’s primary economist Carl Shapiro.
Turning the Berkeley professor’s own trial testimony in regards to the much vaulted “coordination” with Comcast to squeeze cable and internet rivals. “Professor Shapiro conceded that he had no ‘way of accessing [sic] the probability’ of coordination and thus had not attempted to ‘quantif[y] any risk whatsoever’ that the predicted coordination ‘could occur,'” Judge Leon wrote. “The Government has not explained why either company would be willing to forgo those affiliate fees and advertising revenues from virtual MVPDs,” he added.
Perhaps there will be more action on the final season of Game of Thrones next year but now that AT&T looks to get its desire to be betrothed to Time Warner, who sits on the media giant Iron Throne is a new battle just start – ask Comcast, Fox and Disney tomorrow.