The landmark $85 billion AT&T-Time Warner merger that got the green light in June by U.S. District Court Judge Richard Leon is now getting a red light with the Justice Department filing an appeal, stating that the merger would decrease competition and unfairly drive up prices for consumers.
The news came less than a couple of hours after the close of Thursday’s trading session that saw the Dow Jones Industrial Average close over 200 points in the green. Meanwhile, shares of AT&T slipped more than 1 percent in after-hours trading when word of the appeal came to light.
As expected, AT&T General Counsel David McAtee was surprised by this latest development.
“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned. 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,” McAtee said in a statement. “We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals.”
Related: Judge Greenlights $85.4B AT&T-Time Warner Merger
Back in June, U.S. District Court Judge Richard Leon deemed the merger legal and imposed no conditions, allowing the convergence of both media companies to take place. However, in a 200-page opinion, Judge Leon determined that the government was unable to establish that the deal would significantly decrease competition.
The decision would most likely have paved the way for other vertical media mergers to commence–Verizon, Charter and Discovery are all eyeing content companies primed for acquisition while Sprint and T-Mobile may join forces to combat AT&T.
Craig Moffett of MoffettNathanson told CNBC that the original ruling by Judge Leon was so decisive that there aren’t a lot of concrete arguments to be made for the appeal. Nonetheless, he did mention that the Justice Department may try dissent the ruling with the idea that AT&T wouldn’t take into consideration its status as an integrated company during its negotiation of programming agreements.
“It’s just not a terribly credible argument to say that an integrated company doesn’t take into account that it’s an integrated company and, if you reject that premise, I suppose there’s at least a little sliver of a window to say that there’s a basis for an appeal here,” said Moffet.
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