The US Department of Justice may not be through with AT&T and Time Warner yet.
The agency has filed a notice of appeal in its effort to stop AT&T and Time Warner from merging. Only, AT&T.
The move is surprising given the complete victory AT&T won over the Justice Department in the case. US District Judge Richard Leon in June declined the agency’s request to block the merger, and didn’t seek any concessions from the carrier. He also said that he’d deny any request to put a stay on the decision. The Justice Department, letting AT&T seal its deal within two days.
Time Warner was the linchpin to AT&T’s strategy to transform itself into an entertainment powerhouse. With the deal, AT&T took the reins over cable channels like TNT and CNN, as well as Warner Bros. — home of the Justice League — and HBO — home to Westworld and Game of Thrones. The company has quickly made its presence in the media world felt, having launched a second, low-cost streaming service called WatchTV, as well as pushing Time Warner’s crown jewel asset,.
The deal also comes amid further consolidation in the media business, including. In the wireless arena, T-Mobile and Sprint .
That enthusiasm for dealmaking may go on hold as the Justice Department makes its move. The news emerged while the world’s most powerful media and tech executives gathered at the annual Sun Valley conference, sometimes known as the “summer camp for billionaires.”
The Justice Department argued during the trial that if AT&T were to own Time Warner, it could violate antitrust law by using its market power to get higher prices from TV distributors. It could also threaten to withhold content from Time Warner channels — such as CNN, HBO and TNT — from rival services to gain a competitive advantage for AT&T’s TV services. Ultimately, the government argued, this would harm competition and innovation as well as raise prices for consumers.
AT&T and Time Warner dismissed the government’s concerns. Instead, they argued that the media industry is going through a massive change as fewer people subscribe to pay TV services and instead stream content via the internet. Online companies like Amazon, Google and Netflix have emerged as alternatives to the cable industry, with both distributing and creating their own content.
Since completing the deal, AT&T has set up the entertainment business, now rebranded Warner Media, as a separate unit run by AT&T veteran John Stankey.
“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” said David McAtee, general counsel for AT&T. “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.”
The Justice Department declined to comment beyond the filing.
A spokesman for Time Warner wasn’t immediately available for comment.
First published July 12, 1:33 p.m. PT.
Update, 2:01 p.m. PT: To include a statement from AT&T.
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