WASHINGTON (Reuters) - AT&T Inc, which owns DirecTV, awaits a court ruling on Tuesday that will determine if it can buy Time Warner Inc, a decision that could prompt a cascade of pay TV companies buying television and movie makers and the first big test of the Trump administration’s antitrust teams.
Judge Richard Leon of the U.S. District Court for the District of Columbia is expected to rule at 4 p.m. ET (2000 GMT) on whether the $85 billion deal may go forward more than 1-1/2 years after it was announced.
The government argued in a six-week trial this spring that AT&T’s ownership of DirecTV, which has 20 million subscribers, would become too powerful if combined with Time Warner, which owns Turner’s sports and CNN news. That power would allow the company to raise prices for pay TV rivals and online streaming services, the government said.
AT&T said the deal was legal, and pre-emptively offered to take any disputes with pay TV rivals to arbitration while refraining from withholding content, or “going dark”, during the arbitration.
If AT&T wins, the Justice Department may rethink whether to sue to stop other deals where a company buys a supplier, known as a “vertical merger.”
“It depends on the scope of the ruling. If it’s narrow, like ‘I don’t think Time Warner content is that must-have,’ that may have implications in a similar merger in the telecommunications space but may not have a drastic effect in other vertical mergers,” said Caroline Holland, who was in the Antitrust Division during the administration of former President Barack Obama.
A big win for the Justice Department would send shudders down the spines of M&A bankers pursuing deals where a company seeks to merge with a supplier.
Already one deal
