AT&T & DOJ Fire Off Dueling Trial Dates In Merger War – Update
UPDATE, 4:48 PM: After extending the deal deadline earlier today, the first real salvos were fired this afternoon in the war between AT&T and the Department of Justice over the former’s proposed $85 billion merger with Time Warner.
In paperwork filed today, AT&T declare that they want the trial for their battle with the government to come sooner rather than later. Sooner being February 20, 2018 to be specific. “Defendants estimate that trial will require 10 court days and would conclude on or about March 5,” their motion in federal court asserts (read it here) with all the understatement of a dispute over parking tickets.
The DOJ has sought to have the trial commence on May 7 next year. A request that has the communications giant looking to the calendar to hit some targets before hitting a wall so to speak.
“The 92-day schedule proposed by Defendants is fully in line with schedules set by courts in other merger cases,” says the 11-page document motion filed Tuesday in the District of Columbia. “A prompt trial date is particularly important in this case,” AT&T’s O’Melveny & Myers LLP, Cravath, Swaine & Moore LLP and Gibson Dunn & Crutcher lawyers add. “Under the merger agreement, Defendants must begin closing the transaction by April 22, 2018.”
Raising the flag high on a “radically and irreversibly” changing media environment and giving shout outs to the power and reach of Netflix, Hulu, Amazon, Apple, Snapchat, Twitter, Google and Facebook, AT&T’s main lawyers Daniel Petrocelli and Randall Oppenheimer of O’Melveny & Myers also pushed back against the DOJ in an answer to the Government’s action of November 20 to take the mega-merger to court. “The proposed merger of AT&T and Time Warner is a pro-competitive, pro-consumer response to an intensely competitive and rapidly changing video marketplace,” says the reply partially penned by the attorney who saved then President-elect Donald Trump’s hide in the now settled lawsuits over his much tainted Trump University earlier this year.
“Indeed, notwithstanding the Government’s year-long investigation, the Complaint makes no meaningful effort to establish the basic factual predicate of market power, offering no real market analysis or empirical evidence to support its hypothesis that the combination of this particular supplier (among many) and this particular distributor (among many) would harm consumers,” the answer that was also filed in federal court in D.C. on Tuesday asserts (read it here).
While never mentioning the CNN hating man in the Oval Office, AT&T and its attorneys also couldn’t seeming resist a wayward swipe at the real reasoning for this new roadblock on the merger autobahn. “The merging parties cannot explain the Government’s abrupt departure from precedent,” says the company’s formal answer to the DOJ’s initial complaint. “In seeking to block this merger, then, the Government is not only departing from established antitrust precedent, but is also shielding rivals from new competition that would greatly benefit consumers,” the response from ex-Trump lawyer Petrocelli adds with more references to the rise of “the direct-to-consumer platforms of Netflix, Google, Amazon Prime, Facebook, Apple, Hulu and others” and a dramatically shifting media landscape.
“The Government could effectively run out the clock on this merger without ever having to prove its case,” the legion of lawyers bluntly state in the trial date motion, pulling back the veil on what is clearly a DOJ intention. “The Government’s contention that the parties can simply extend the merger deadline unjustifiably disregards the risks and uncertainty inherent in any renegotiation of a complex agreement affecting numerous stakeholders.”
In other words, with AT&T noting that “merger challenges are inherently time-sensitive,” it is really on.
PREVIOUSLY, 7:31 AM: AT&T and Time Warner have extended the deadline for their pending $85 billion merger until April 2018, which they hope will allow their looming courtroom fight with the government to be resolved.
The new deadline is April 22, but in a sense the U.S. Department of Justice already had extended the date when the deal’s fate would be determined when it opted to file a lawsuit earlier this month to block the deal. Estimates vary in terms of how long a trial would take, but it could begin in the coming weeks and AT&T, which announced the acquisition in October 2016, is eager for a resolution.
Makan Delrahim, head of the DOJ’s antitrust division, has said that regulators had determined that the “behavioral remedies” that would be required in order to OK the deal would require too much government oversight. Instead, regulators are urging “structural remedies,” meaning AT&T would have to restructure the deal and shed assets such as DirecTV or CNN in order to pass muster.
President Donald Trump has voiced objections to the deal on the basis that it is simply too large and would boost cable TV bills, weirdly putting him in alignment with many activist groups and Hollywood guilds, which also oppose it due to its massive scale. Trump, of course, has also vilified CNN, and the fact that Delrahim and the DOJ have suggested AT&T would need to carve out CNN or other assets in order to win approval have sparked speculation that the lawsuit is driven by presidential spite.
During a forum hosted by NBC this morning, Pivotal Research analyst Brian Wieser said he is unpersuaded by Delrahim’s argument. “Will consumers be harmed by this? I am highly skeptical,” he said. Plus, “they’re not going to have what Google and Facebook have,” in terms of a near-monopoly in the advertising business.
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