DOJ to Appeal AT&T and Time Warner Merger

The Justice Department announced today that they will be appealing AT&T’s merger with Time Warner.

In June, a Federal Judge approved AT&T’s $85.4 Billion acquisition of Time Warner without any conditions, but the DOJ had 60 days to appeal. Since the conclusion of the deal, AT&T has been under scrutiny for raising customer prices despite claiming that the deal would keep consumer prices down.

In their post-trial brief, they commented:

“The evidence overwhelmingly showed that this merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices, offer innovative video products, and compete more effectively against the increasingly powerful, vertically integrated ‘FAANG’ (major internet) companies…there is no sound evidence from which the Court could fairly conclude that retail pay-TV prices are likely to increase”

However, since the merger:

  • AT&T raised the price on DIRECTV NOW by $5 a month on all plans, including those on a grandfathered $35 a month Go Big plan that early users received.
  • They increased their monthly administrative fee to $1.99 a month for the majority of post-paid cell phone subscribers. The $1.23 increase adds ~$800 million in revenue to the company.
  • They launched AT&T WatchTV which includes 37 channels for $15 a month. The service which was heavily promoted as only being viable if the deal was approved comes free to wireless subscribers, but only if they upgrade to the newly launched, but more expensive AT&T Unlimted&More plan.

AT&T now faces the challenge of once again proving that the deal will not reduce competition and cause an increase in what consumers pay for television.