Earlier today, a federal judge approved AT&T’s bid to purchase media company Time Warner. The deal was finally approved after months of scrutiny and opposition from the government themselves. The deal is worth $85.4 billion dollars, and is a massive win for AT&T. Even bigger yet, it could also be the catalyst for an arms race for content held by cable providers.
The decision came after the judge decided that the US Justice Department had not proven that the deal would lead to fewer choices and higher costs for consumers. That has long been the position of the Justice Department, who opposed the merger almost immediately. AT&T argued that with the acquisition of Time Warner, they would be able to implement targeted, high paying ads, which would deliver them enough revenue to “eventually” lower the costs of their services.
If the deal does actually complete, and isn’t appealed AT&T will have created a media powerhouse. Time Warner is home to several Turner networks, CNN, and HBO to name a few. Those networks would be able to be integrated into all of AT&T’s television offerings at a much cheaper rate for them, but they could become a lot more expensive for non AT&T providers. Should AT&T decide to raise the cost on which other providers pay to access these services, the cost would then be shifted down to consumers. This is what the Justice Department’s primary concern is: The potential for AT&T to either price out, or completely black list their newly owned content away from the competition.
Justice Department Antitrust Chief, Mark Delrahim expressed “disappointment” in the ruling and said he would review the 172 page decision himself. After reviewing the ruling, Delrahim could still potentially challenge it by taking the case to a higher court. The courts would then have to issue a stay on the ruling, which would then allow Delrahim to file an appeal on against the decision.
Eyes will continue to be on AT&T and the Justice Department as this decision unfolds, as the court battles could be just beginning.