As it prepares to return to the courtroom in an effort to undo the $85.4 billion merger of AT&T and Time Warner, the Department of Justice today outlined its strategy for its appeal of a federal judge’s June ruling allowing the deal to close.
As they did during the initial trial in the spring, regulators pointed to arguments DirecTV made years ago in opposing the tie-up of Comcast and NBCUniversal. (Coincidentally, that merger was approved by the same judge who OKd AT&T-Time Warner). “The evidence established the harm AT&T predicted is likely to occur here,” the DOJ asserted in a brief filed in its case at the D.C. Circuit Court of Appeals. (Read the full brief HERE.) “The district court held otherwise, but only by erroneously ignoring fundamental principles of economics and common sense.”
In issuing a sharp rebuke of the government’s case and handing AT&T a total victory on June 12, U.S. District Court Judge Richard J. Leon opened the floodgates for media dealmaking. He also enabled the historic AT&T-Time Warner deal to close, meaning it would need to be undone were the three-judge panel at the appellate level to contradict Leon’s ruling. There are many other potential outcomes of the appeal, which is expected to begin with hearings in October, including forcing the divestiture of some of the Turner networks or placing tighter limits on AT&T as a distributor. The D.C. Circuit could also remand the case back to the District Court for a re-trial.
In a statement, AT&T’s general counsel David McAtee did not hold back in responding to the DOJ’s argument. “Appeals aren’t ‘do-overs,’” he said. “After a long trial, Judge Leon weighed the evidence and rendered a comprehensive 172-page decision that systematically exposed each of the many holes in the Government’s case. There is nothing in DOJ’s brief today that should disturb that decision.”
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