Justice Department appeals AT&T-Time Warner merger

Justice Department appeals AT&T-Time Warner merger
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The Justice Department on Thursday filed to appeal a federal judge's decision to approve the $85 billion AT&T-Time Warner merger.

In a massive blow to prosecutors, Judge Richard Leon of the U.S. District Court for the District of Columbia said last month that the merger could move forward without any conditions attached.

The two companies closed the deal days later.

The Justice Department sued to block the deal in November 2017, alleging that the combination would allow AT&T, the largest pay-TV provider in the country, to use Time Warner's stable of popular entertainment offerings to suppress competitors.

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Among the networks under Time Warner's umbrella are HBO, CNN, TNT and TBS. Prosecutors argued that AT&T could inflate the price of HBO for other content distributors.

Leon dismissed their arguments and the economic forecasting they relied upon that showed the merger would raise prices for consumers and hurt competition.

Instead he backed AT&T's claims that the merger would allow the companies to marry the telecom giant's trove of consumer data with Time Warner content in order to deliver targeted advertising — a market that's currently dominated by web giants like Facebook and Google.

But last week, critics seized on reports that AT&T was already planning to raise prices on DirecTV Now streaming service. The company said the increase was meant to bring rates in line with the market.

AT&T said Thursday that it's prepared to keep up the fight for the merger.

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned," David McAtee, AT&T's general counsel, said in a statement about Leon's ruling.

"While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances. We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals.”

A spokesman for the Justice Department declined to comment on the filing.

AT&T has already taken over Time Warner, which it's renamed Warner Media, and installed John Stankey, a longtime AT&T executive, at the helm. In a recent town hall event with HBO employees, Stankey unveiled his vision for the network.

“I want more hours of engagement," he said, according to a recording obtained by The New York Times. "Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

This story was updated at 5:26 p.m.