U.S. Seeks To Speed Appeal of AT&T Deal -- WSJ

By Brent Kendall 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 19, 2018).

WASHINGTON -- The Justice Department on Wednesday sought to fast-track its appeal of the court decision allowing AT&T Inc. to buy Time Warner Inc., while offering the first hints of its legal arguments for the next phase of proceedings.

The department filed its appeal last week, a month after U.S. District Judge Richard Leon rejected the government's antitrust claims against the more than $80 billion deal, which AT&T and Time Warner have since completed.

The Justice Department on Wednesday asked the U.S. Court of Appeals for the District of Columbia Circuit to adopt an accelerated timeline for the appeal, with all legal briefs filed by mid-October and oral arguments to follow shortly thereafter. That could allow the appeals court to reach a decision in early 2019.

AT&T, which would like to remove prolonged legal uncertainty over the deal, doesn't object to the expedited timeline, according to the government's court filing.

The Justice Department argued that any delay in deciding the appeal "will make it increasingly difficult to unwind the merger," if the government wins.

AT&T previously has agreed to hold Time Warner's Turner cable networks in a separate business unit through next February during any appeals-court proceedings.

If no appeals decision has been reached by then, "AT&T immediately can be expected to exercise the increased bargaining leverage that it would gain from control of Turner," the Justice Department said in Wednesday's filing.

The department argued during a six-week trial this spring that AT&T, which owns DirecTV, could demand higher fees for "must have" Turner networks like TNT, TBS and CNN, which would put rival cable and satellite TV providers at a disadvantage and lead to higher prices.

Judge Leon rejected those arguments and agreed with AT&T that acquiring Time Warner wouldn't give the merged company anticompetitive leverage.

AT&T said the merger would help the companies compete for advertising dollars and better deliver video products to wireless subscribers.

The Justice Department's latest court filing signaled that a key part of its appeals argument will be that Judge Leon erred by disregarding fundamental economic principles about how two companies bargain during contract negotiations.

The department said the merger makes AT&T and Time Warner "less vulnerable to economic harm" when the merged firm negotiates future contracts with rival TV providers on fees for carrying the Turner networks. That means AT&T "can and will credibly hold out for higher fees," it said.

"The district court's disregard of economic reasoning constitutes reversible error," the Justice Department argued.

A person familiar with AT&T's thinking said the company will argue that Judge Leon fully understood the government's economic theory but the facts of the case didn't support it.

Write to Brent Kendall at [e-mail]

(END) Dow Jones Newswires

July 19, 2018 02:47 ET (06:47 GMT)

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