Differing Views Seen on Strength of DOJ's Challenge to AT&T/TW Deal
Vertical mergers are nearly always pro-competitive and pro-consumer, result in lower consumer pricing or better products, and no loss of competitors in the market, R Street blogged Wednesday, calling DOJ's case against AT&T's buy of Time Warner (see 1711200064) "weak."…
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It said negotiations about merger conditions likely will continue in coming weeks. A "targeted" behavioral condition covering the licensing of TW content to competing online video distributors like Sling TV "may be enough to grease the wheels and get this merger over the line," it said, but it's not clear if AT&T would accept such conditions or try to get court approval of the buy without any conditions. Many antitrust experts said the DOJ doesn't face easy success (see 1711210005). DOJ has a strong case, given the growing bipartisan view that behavioral conditions are problematic, Cleveland State University law professor Chris Sagers blogged Tuesday. Federal agencies frequently put conditions on vertical mergers, he said, saying the size of the deal -- one of the largest in history -- is also important. It could help the DOJ that the case has been assigned to U.S. District Judge Richard Leon, whose opinion in the Tunney Act proceedings in the Comcast/NBCUniversal merger (see 1109020106) "was modestly strongly worded," and who ordered the government's requested relief "be toughened up in a few respects." Separately, Technology Policy Institute President Emeritus Thomas Lenard, in a column Wednesday in RealClearPolicy, said AT&T likely went into the TW deal thinking it could negotiate conditions similar to those put on Comcast/NBCUniversal. But the antitrust division, with its suit, is making clear it doesn't favor such conditions in AT&T/TW, Lenard said. Divestitures have costs, such as destroying some of the value and efficiencies the parties hoped to get from the deal, plus their disruption, he said, saying the facts of the case will determine whether structural or behavioral remedies are best. In a tweet Tuesday, telecom consultant Jonathan Lee waved off the DOJ's argument that TW-owned sports content like NBA, MLB and NCAA games are must-have content, citing Charter Communications and SportsNet LA and its challenges getting carriage on MVPDs. The DOJ complaint ignores the travails the legacy media sector faces from cord cutting to ad dollars shifting online and the hope M&A represented, BTIG Research Analyst Rich Greenfield wrote Wednesday. He also said DOJ arguments Turner content is must-have is questionable. And he said it was surprising the complaint didn't have clear examples of Comcast/NBCU consent decree failures or the economic harms inflicted on consumers, since DOJ presumably will need to show that deal hurt competitors and consumers and that the larger AT&T/TW deal carries larger potential hurts.