AT&T Will Be Allowed to Close Time Warner Merger

The government confirms it won't seek a stay, but an appeal could happen nevertheless after AT&T agrees to "firewall" Turner Network operations.
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AT&T is now on the verge of closing its mega-acquisition of Time Warner after an historic antitrust ruling and a follow-up motion by the parties including the U.S. government.

On Tuesday, U.S. District Court Judge Richard Leon approved the merger and rejected the Justice Department's contention that combining the nation's biggest pay-TV distributor with the owner of HBO, CNN, TBS and TNT would be likely to lessen competition.

Under the old case management plan, AT&T and Time Warner had agreed to hold off on completing the merger for about a week after the decision to give the government time to consider its course. Judge Leon had indicated he wouldn't be willing to issue a stay on the order that essentially blesses the merger, but the Justice Department could have nevertheless sought intervention by the DC Circuit Court of Appeals to stop the merger from happening. The judge thought that wouldn't be fair to let the government achieve a blockade on the merger even indirectly.

The Justice Department apparently has taken the judge's words to heart and won't seek a stay. However, this doesn't mean that the government won't appeal. In fact, an appeal could be more likely after the two sides exchanged communications in the last 48 hours.

In a letter to the Justice Department attached to a joint motion to modify the case management plan, AT&T basically pledges to allow Turner networks to operate independently until late February. Daniel Petrocelli, the attorney for the merging parties, confirms that for the next eight months, Turner Networks will operate as a separate business unit, that AT&T Communications won't have a role in setting Turner's prices or terms with unaffiliated distributors, that compensation and benefits for Turner employees will remain unchanged and that there will be a "firewall" between Turner and AT&T Communications.

This could be interpreted as a middle ground that will allow the merger to happen, but make an unwinding more easy if an appeals court should later reverse Leon's decision.

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