By Diane Bartz and David Shepardson
WASHINGTON (Reuters) – AT&T Inc (NYSE:) emerged victorious on Tuesday over the Trump administration’s drawn-out attempts to block its $85.4 billion purchase of Time Warner as the U.S. Justice Department said it would not fight an appeals court ruling approving the deal.
The acquisition had been closely watched in political circles after coming under fire from U.S. President Donald Trump, who opposed it because he saw it helping Time Warner’s CNN unit, which he has accused of broadcasting “fake news.”
The three-judge panel on the U.S. Court of Appeals for the District of Columbia ruled unanimously in favour of the deal on Tuesday, saying that the government’s case that the merger would result in higher consumer prices was “unpersuasive.” The decision ended a 15-month effort by the Justice Department to block the deal.
It was AT&T’s second major court victory against the Justice Department, setting the stage for the No. 2 wireless carrier to integrate its WarnerMedia business as well as its new Xandr advertising unit.
“We are grateful that the Court of Appeals considered our objections to the District Court opinion. The department has no plans to seek further review,” Justice Department spokesman Jeremy Edwards said in a statement.
Makan Delrahim, the head of the Justice Department’s antitrust division, telephoned AT&T General Counsel David McAtee and Time Warner’s former general counsel, Paul Cappuccio, to congratulate them on the court victory, according to a source familiar with events.
McAtee said the merger “has already yielded significant consumer benefits and will continue to do so for years to come.”
The deal has been seen as a turning point for a media industry that has been upended by companies like Netflix Inc (NASDAQ:) and Alphabet (NASDAQ:) Inc’s Google that put content online with no need for a cable subscription.
The merger, which was announced in October 2016, closed on June 14, 2018, shortly after U.S. District Judge Richard Leon ruled it was legal under antitrust law.
AT&T agreed to manage the Turner network separately until Feb. 28, or until the conclusion of any appeal by the Justice Department. AT&T also agreed it would have no role in setting Turner’s prices to distributors and the number of Turner employees would remain largely unchanged.
The appeals court took a shot at Leon, who had been scathing in his assessment of the government’s attempt to stop the deal.
“Undoubtedly the district court made some problematic statements, which the government identifies and this court cannot ignore,” the panel said in its opinion.
Gigi Sohn, who worked at the Federal Communications Commission during the Obama administration, said the ruling showed a need to reform antitrust laws so the government can stop problematic deals.
“AT&T is favouring both Time Warner and DirecTV content over its broadband services through its DirecTV Now and Watch services,” she said. “Consumers are the losers.”
AT&T stock closed up 0.3 percent at $31.22 on Tuesday.
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