Washington (AFP) – A high-stakes decision in a US court Tuesday will be significant for the future of Big Media, Big Tech and big business in general.
A US federal judge was set to announce his verdict in the $85 billion merger of wireless and broadband giant AT&T with media-entertainment conglomerate Time Warner.
In the most high-profile antitrust case in decades, the ruling is likely to set a benchmark for whether other mega-deals, especially in the media and communications sectors, can proceed or will face heightened antitrust scrutiny.
Judge Richard Leon scheduled a hearing for 4:00 pm (1900 GMT) to announce his decision, which may come around the same time as a written opinion following a seven-week bench trial.
A number of consumer groups have backed the Trump administration’s decision to sue to block the deal, on the assumption that combining the largest pay TV operator with a major media-entertainment player would diminish competition and lead to higher prices.
Other analysts maintained that because it is a “vertical” tie-up of two companies without overlapping operations, it should pass muster based on legal precedent for the past three decades.
At&T and Time Warner argue they need more scale to compete with online rivals like Netflix and Amazon and with Silicon Valley giants like Google, Facebook and Apple which are expanding in the sector.
Wayne Crews of the Competitive Enterprise Institute said the government’s case ignores the technology which is rapidly changing the media sector.
“Compare today to the 50s or 60s when we had three television stations and you had one AT&T that was, then, protected by government monopoly,” Crews said.
“Antitrust is like a subsidy from government for companies opposing someone else’s transaction. It works like protectionism.”
The ruling comes with other big mergers awaiting review.
Walt Disney Co. is seeking to buy major film and television operations of Rupert Murdoch’s 21st Century Fox, which would consolidate two big Hollywood studios. But the big cable and media group Comcast is expected to offer a higher bid.
Number three wireless carrier T-Mobile, meanwhile, is seeking a tie-up with number four Sprint.
The trial is the first in decades involving a “vertical” merger of companies that don’t have overlapping operations but which operate in the same sector.
– ‘Outsized’ impact –
“This decision will have an outsized effect because there are so few antitrust trials that challenge vertical mergers,” said Michael Carrier, a Rutgers University law professor specializing in antitrust.
“If AT&T wins, it makes it easier for other companies to say they should be able to merge.”
The tie-up would wed largest US pay-TV operator and the second-largest wireless phone carrier with Time Warner, owner of premium channel HBO, the Warner Bros studios, Cartoon Network and CNN.
The AT&T case has long had political overtones. Donald Trump criticized the deal during the 2016 election campaign, and some analysts said the president wanted to block any deal helping Time Warner unit CNN, which he regularly attacks.
Former Federal Communications Commission staff attorney Blair Levin said a loose interpretation of antitrust law would allow the government to block almost any deal, and open up the process to political interference.
While the motive behind the challenge to AT&T’s deal may never be known, Blair said politicizing the process would be “extremely dangerous for the country.”
“If what you see is a pattern where friends of the president get their deals approved and his enemies are challenged, it’s problematic,” Levin said.
In any case, the judge’s decision — which could block, allow or approve the merger with restrictions — is unlikely to be the final word. An appeal is possible from either side.