AT＆T deal to acquire Time Warner in jeopardy due to late trial date

The clock is ticking on American Telephone & Telegraph (AT&T)'s 85.4-billion-U.S.-dollar bid to buy media and entertainment company Time Warner. With the Trump administration bringing in a lawsuit to block the sale and the federal judge presiding over it setting the trial hearing for March 19, the deal could be in jeopardy.

"Unrealistic" deal date

The antitrust suit was originally filed in November, contending that a deal of this scale would transform the Hollywood media playing field, harm American consumers, lead to higher television bills, and reduce innovation and choice in the industry.

The late trial date has raised eyebrows since AT&T will have to pay an eye-popping late fee of 500 million dollars to Time Warner if the deal is not closed by April 22.

The March 19 court date, merely a month before the required closing, makes a costly default virtually certain.

Judge Richard Leon, who will be presiding over the antitrust case, has said reaching a decision on the merger could take several weeks, The Washington Post reported last weekend.

"April 22 is not realistic. Not with a trial date in mid-March. Just can't," the judge averred.

As a high-profile federal judge in the U.S. District Court, Leon is considered to be an independent thinker with no bias in favor of any political party.

He presided over the landmark case which ruled that the federal government's collection of American phone records was "probably unconstitutional."

Undue political influence?

Considering the scale of the deal, the Trump administration's stepping in would not have been surprising if there hadn't been precedents to the contrary.

The Department of Justice (DOJ) has already ruled in favor of a merger between telecom conglomerate Comcast and media and entertainment company NBC Universal. So the resistance to a similar AT&T-Time Warner merger is raising questions.

Also, the DOJ has threatened to block the deal unless AT&T/Time Warner agrees to sell off major assets, CNN in particular, as a condition of the merger, deepening suspicions of undue influence.

"President (Donald) Trump's disdain for CNN is no secret. Now, reports suggest the Justice Department may be pushing CNN's owner Time Warner to sell the network as a condition of a corporate merger," a Washington Post report said.

"The acquisition may pose legitimate antitrust concerns. But Mr. Trump's behavior raises the specter of political retaliation, which in turn increases the need for transparency in the antitrust decision-making process," the article concluded.

Senator Ed Markey also expressed concerns, saying, "The Department of Justice's review process should be entirely void of politics. Any suggestion that the deal be conditioned on selling off a news channel because of its coverage is offensive to both the First Amendment and the rule of law."

Behemoths on the card

AT&T is the world's largest telecom company and the 11th largest company, with an annual revenue of 164 billion dollars and assets over 400 billion dollars.

Time Warner, with annual revenue of 28 billion dollars and assets worth 63 billion dollars, is the third largest entertainment company in the world, surpassed only by Comcast and The Walt Disney Company.

Their merger plan indicates that multinational telecom and media content companies are coming together to carve out media empires, experts said.

"I'd predict the industry will end up with seven or eight massive distributors, like AT&T, Comcast, Verizon, Charter, Google, Facebook, Amazon and Apple," Peter Rice, 21st Century Fox chairman and president of the Fox Network Group, said.

He further predicted that studios and content companies lower down the food chain would either be sold to the big eight or be integrated into one of them.

Rice said scale matters. "Everybody needs great content," he remarked.

(ASIA PACIFIC DAILY)