In June, a federal judge ruled that the $85.4 billion deal was legal and imposed no conditions on the merger.
At the time, the Justice Department expressed its disappointment with the ruling. The government argued that the deal would make the pay-TV market “less competitive and less innovative.”
But in his nearly 200-page opinion, U.S. District Court Judge Richard Leon determined that the government failed to meet its burden to establish that the deal would significantly decrease competition.
Since announcing its bid in October 2016, AT&T has maintained that buying Time Warner would help the company compete against tech companies like Amazon and Netflix. AT&T, the No. 2 wireless carrier in the U.S., said the deal would help the company attract customers by bundling entertainment with mobile service.
Leon had warned the government against using a stay to postpone the deal’s completion, saying it would be “unjust” and “cause certain irreparable harm to the defendants.” The Justice Department ultimately decided against filing to delay the closing of the deal, which was completed within days of the favorable ruling.
While the judge said an appeal was “fair game,” Leon pointed out that the investigation and legal proceedings had run up a “staggering cost” for both the companies and the government.
Craig Moffett of MoffettNathanson told CNBC’s “Fast Money” that given how decisive Leon’s ruling was, there aren’t a lot of obvious arguments the government can make for its appeal. He said, however, that the Justice Department may try push back on the idea that AT&T wouldn’t take into consideration it is an integrated company when it is negotiating 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,” Moffett said.
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