AT&T Fires Back At DOJ, Calling Anti-Merger Case “Narrow And Fragile”

AT&T has filed its response to the government’s appeal of its acquisition of Time Warner, a 58-page catalog of what the company says are the failures of the initial case.

The response (read it HERE) derides the Department of Justice complaint, filed last November and resoundingly rejected by a federal judge in June, as “both narrow and fragile.” The appeal was filed over the summer, and courtroom action is expected to begin next month in the D.C. Circuit Court of Appeals (where Supreme Court nominee Brett Kavanaugh has been sitting on the bench).

Attorneys for AT&T maintain that the $79.1 billion acquisition of Time Warner was never shown in court to be harmful to competitors or to consumers, the key contentions of the government. The Turner networks, the DOJ had argued, could be weaponized by AT&T given that it controls top satellite operator DirecTV. U.S. District Court Judge Richard J. Leon sided emphatically with AT&T in his ruling, which enabled the merger to go through after a nearly two-year regulatory odyssey.

“Analysis of this case must begin with a critical fact that DOJ acknowledged in its affirmative case: by saving money on Turner programming, the post-merger AT&T will charge its customers at least $78 million less annually than it would charge them if the merger were blocked,” AT&T wrote in its response.

“A wealth of evidence at trial—much of it from DOJ’s own witnesses — refuted DOJ’s prediction that the merger would enable Turner to raise its wholesale prices. DOJ therefore portrays a prediction based on Nash bargaining theory as an ineluctable fact compelled by the laws of economics and ignores key evidence disproving that prediction. These tactics provide no basis for overturning the district court’s finding on this point.”

In a brief statement after the filing, AT&T General Counsel David McAtee said, “We were pleased to respond to the government’s opening brief and look forward to oral argument.” AT&T CEO Randall Stephenson expects a more expeditious process than the seven-month initial trial. In an appearance at a Wall Street conference last week, he predicted a resolution by January or February.