DOJ Agrees To Let AT&T-Time Warner Merger To Close But May Yet Appeal

Apparently heeding the stern advice of a federal judge, the Department of Justice has agreed to allow the deal to close as early as tomorrow, declining to seek a stay that would have created yet more legal limbo for the transaction.

A DOJ official told Deadline that the antitrust division “continues to evaluate its options with respect to appeal” of Tuesday’s ruling by U.S. District Court Judge Richard J. Leon. Any appeal coming after the close of the $85 billion merger would have to seek a court’s permission to break up the company.

The decision not to pursue a stay was revealed in a memo from lead defense attorney Daniel Petrocelli, which was filed on the court record this afternoon (read it HERE). The memo lays out four conditions agreed to by both parties, as a result of a request from regulators for details about the integration of the Turner networks into AT&T. The networks, including CNN, TNT and TBS, are by far the most sensitive assets in the mix in the government’s view, compared with Warner Bros. and HBO, whose business models do not rely on advertising and carriage in the same way.

AT&T agreed to run the Turner networks separately from AT&T Communications, which includes the DirecTV and U-verse cable business units, and not to play a role in determining pricing for the Turner networks. (One of the key elements in the government’s complaint was that AT&T could “weaponize” the Turner networks to control pricing, squeezing both rivals and consumers.)

Further to this point, the company agreed to “implement a firewall” between the satellite and cable system side of the house and the Turner networks, aiming to prevent any sensitive data or information from being shared. It also said that target compensation and bonus levels would remain unchanged, the parties also said, as will the number of Turner employees. That presumably removes the potential threat that financial efficiencies could be achieved by having employees have job functions with overlap between the usually Hatfield-and-McCoy programmer and distributor entities.