Feds Appeal Merger Go-Ahead for AT&T, Time Warner

WASHINGTON (CN) – The government’s challenge to the blockbuster $85.4 billion AT&T-Time Warner merger got fresh oxygen Thursday as the Justice Department said it will appeal a federal judge’s approval of the merger.

U.S. District Judge Richard Leon had approved the transaction one month ago today, saying the government failed to show that the deal would harm competition or raise prices for consumers. The companies have since consummated the merger, which Leon approved after six weeks of trial without preconditions.

The government had expressed disappointment with the court’s June 12 ruling, but declined to seek an immediate stay after Leon said any attempt to further delay the transaction would be a “manifestly unjust outcome.”

The Justice Department filed its notice of appeal to the D.C. Circuit late Thursday afternoon but declined to comment on its decision to appeal.

Late last month AT&T raised prices for its DirecTV Now streaming service by $5 per month. While such price hikes are not uncommon, the increase came after defense attorneys argued extensively during trial that the merger would actually drive down prices for consumers.

Time Warner CEO Jeff Bewkes had argued that the merger would allow the companies to withstand tumultuous shifts in advertising models. AT&T CEO Randall Stephenson meanwhile said owning Time Warner content would allow it to survive major changes in traditional cable TV subscriptions and compete with online streaming giants like Netflix and Amazon.

The Department of Justice sued to block the merger last year, but Leon soundly rejected and dismantled all aspects of the government’s case in a 175-page ruling. The case will now come before a three-judge appeals panel at the D.C. Circuit.

AT&T General Counsel David McAtee said in a statement the company is surprised by the appeal given the strength of Leon’s ruling.

“The court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” McAtee said. “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.”

McAtee said the company is ready to defend Leon’s approval of the merger.

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