Time Warner Gets New CEO as AT&T Completes Acquisition
AT&T Acquires Time Warner
Media outlets report that AT&T has completed its acquisition of Time Warner. This comes a few days after judgment was given in favor of the vertical merger, even with objections against it by the US Department of Justice that it would affect competition and consumers.
Sources indicate that the $80bn (£60.34bn) deal has been ongoing for two years and its completion has produced one of the largest US antitrust suits. The merger now makes Jeff Bewkes a former Chairman and CEO of Time Warner although AT&T has said he will be retained as a senior advisor for the transition period. Sources claim that Bewkes’ reports will now be directed to John Stankey, the CEO of AT&T’s media business.
AT&T is a telecom giant and Time Warner, an entertainment firm, is the owner of Warner Bros. Movie studio, DC Comics and cable networks HBO, CNN, TNT, and TBS. Media outlets report that AT&T claims that this deal will expectedly save the telecom giant $2.5 billion in “synergies” and the company also expects to experience significant revenue growth within 4 years.
US District Judge, Richard Leon ruled last week Tuesday against the U.S. government antitrust suit that the vertical merger shouldn’t be approved on grounds that it was anti-competitive. The government claimed that the vertical merger, which is a term used in reference to situations when companies providing complementary or different products come together, would negatively affect consumers. The DOJ addressed the deal as the “antitrust case of the decade”.
Media outlets report that Leon issued a warning to the government not to ask for a stay as it would amount to manifest injustice capable of killing the acquisition. Sources further claim that Justice Department in a court filing had stated that it had no plans to request for a stay to have the merger stopped and the DOJ and both parties to the deal subsequently agreed to close the deal. An inside source indicated that the DOJ officials in the antitrust department expressed their disappointment with the decision although it didn’t catch them by surprise as, during the trial period, the Judge appeared to have doubts about their arguments.
Sources indicate that the Justice Department may however still appeal against the court’s ruling and if the appeal is successful, that will undo the merger. Further, it was stated that if the appeal doesn’t turn out successful, the matter could still proceed to the Supreme Court. A Justice Department Spokesperson reportedly stated that they had not made a decision about appealing and they are still weighing their options.
The District Judge reportedly mentioned to the DOJ lawyers in court that based on the merits of the case, he wasn’t of the opinion that the government had the likelihood of winning an appeal. Sources indicate that a vertical merger case has not come before the Supreme Court since the 1970s and antitrust lawyers are looking forward to this case going before the court, so it serves as an avenue for clarification of contemporary standards on antitrust law.
Media outlets report that AT&T and Time Warner’s lead counsel, Daniel Petrocelli sent a letter to the Department of Justice where the plans for managing the cable networks including CNN, TNT and TBS were expressly stated.
As stated in the letter, the management of the media firm will be carried out as a distinct business unit, and AT&T will not meddle in fixing prices with Turner’s distributors. It was also mentioned in the letter that the population of the newly acquired company’s employees, their work benefits, and salary would not be changed.
Effects Of The Merger
Media outlets report that this marks the first time a case on the vertical merger will be adjudicated upon since the invention of cell- phones and is likely to cause a change in the media and distribution industry. The deal between AT&T and Warner Turner implies that popular franchises such as CNN, Game of Thrones and Wonder Woman are now under the auspices of AT&T.
Sources claim that different content distribution companies are now expected to give a shot at the acquisition of content production companies as this deal may change the pattern of making deals in the telecom and media industries. Reports indicate that this change has begun as Comcast reportedly placed a $65billion bid for Fox against Disney’s $52.4 billion bid in December.
Sources also report that this merge holds the possibility of reshaping the mode of streaming TV and movies by consumers and the cost of streaming these movies. In a statement by Randall Stephenson, CEO of AT&T, the company has the intention of launching a new approach to the workings of the entertainment and media industry for content creators, distributors, advisers and the consumers.
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