Homepage / Technology / Here's what the DOJ needs to happen to win its appeal against AT&T
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


Here's what the DOJ needs to happen to win its appeal against AT&T

The Department of Justice has not given up: It’s still trying to block AT&T‘s acquisition of Time Warner (now named Warner Media). And it probably dooms Comcast’s chances of buying Fox.

For Comcast it doesn’t really matter that the only way the Department of Justice can win is if the D.C. Circuit Court of Appeals rejects the fundamental premise behind U.S. District Judge Richard Leon’s 172-page decision. The appeal itself may cast enough doubt on Comcast’s chances that it will more formally shift its attention to acquiring Sky rather than the remainder of Fox, which includes the Fox movie studio, Sky India, a 30 percent stake in Hulu and other assets, according to a person familiar with the matter.

Comcast only moved forward with its deal for Fox because of Judge Leon’s decision on AT&T. Comcast has already signaled a shift in strategy by bidding on Sky instead of raising its bid for Fox. Fox shareholders are set to vote on Disney’s improved cash-and-stock offer on July 27. The U.S. government has already cleared Disney’s purchase of Fox’s assets.

The DOJ decision to appeal doesn’t affect Comcast’s bid to acquire Sky, the person said. A Comcast spokesperson declined to comment.

Judge Leon determined the DOJ did not prove that AT&T buying Time Warner would lead to higher prices for consumers. The DoJ had argued that AT&T could withhold channels such as CNN, TBS and TNT to ask for more money from TV providers. If operators said they wouldn’t pay, AT&T’s DirecTV could theoretically offer the channels and give customers a chance to switch their pay-TV service.

Judge Leon rejected the premise, arguing that pay-TV distributors could successfully operate without those channels and thus reject theoretically unfair price hikes.

“Based on the evidence, I agree with defendants that Turner’s content is not literally ‘must have’ in the sense that distributors cannot effectively compete without it,” Leon wrote. “The evidence showed that distributors have successfully operated, and continue to operate, without the Turner networks or similar programming. … I therefore give little credit to blanket statements by third-party competitor witnesses indicating that the entire ‘viability of [their] video model’ could depend on whether they offer Turner programming.”

Judge Leon was so thorough in his judgment that the DOJ’s chances of winning are slim, said Logan Breed, an antitrust partner at the law firm Hogan Lovells.

It’s virtually impossible for the Court of Appeals to overturn the ruling based on the facts of the case, because the D.C. Circuit Court judge wasn’t in the courtroom and didn’t hear all of the evidence, said Breed. That means the only way Judge Leon’s verdict will be rejected is if a judge finds he misapplied or misunderstood the law.

“I don’t think the appeal makes much sense, given the specific nature of Judge Leon’s opinion and the depth and detail with which he wrote his findings,” said Breed, who expects the appeals court to rule within a couple months.

In fact, the DOJ appeal may backfire and make vertical integrations even more likely to pass through regulatory approval in the future if the appeals court decides stronger and clearer language is warranted, Breed said.

But Cornell Law antitrust professor George Hay believes the judge missed an important point. He believes DOJ has a chance if it can convince the appeals court that consumers will feel some harmful effect from AT&T buying Time Warner.

“When Coors merges with Miller Lite, there will be an effect on the price of both Coors and Miller Lite, though it might be too small to be of concern. But the very fact that some Coors drinkers would switch to Miller if Coors were to increase the price of Coors (and vice versa) is enough to give rise to an effect,” said Hay. “The judge didn’t get that.”

In other words, Judge Leon ruled the merger’s effect on prices would be insignificant. But if an appeals court says the more important point is that there simply would be any effect and that even a small potential jump in price would be bad for consumers, the DOJ has a shot, Hay said.

If the DOJ does win, AT&T can then ask the Supreme Court to take on the case. It would be the first vertical integration case the Supreme Court has heard since 1972, when the Court ruled Ford Motor could not acquire certain assets of Electric Autolite because of competitive harm. That case, however, showed much clearer consumer harm than AT&T’s purchase of Time Warner, Breed said.

If the case were to be sent to the Supreme Court, a ruling likely wouldn’t come until 2020 at the earliest, Breed said. That means DOJ would operate under the standards it used to block AT&T’s deal for Time Warner until then.

It’s unclear what a DOJ win would mean for the near-term future of Warner Media. AT&T has put a self-imposed division between itself and Turner’s cable networks, including CNN, TBS and TNT, which would make a theoretical unwinding of the merger easier.

“AT&T Communications will have no role in setting Turner’s prices or other terms to unaffiliated distributors, and Turner will not consult with AT&T Communications in setting Turner prices or other terms for programming provided to unaffiliated video distributors,” AT&T said when it closed the Time Warner deal.

Still, AT&T CEO Randall Stephenson told CNBC Friday that he expected an appeal and that the decision won’t change his company’s integration plan with Warner. AT&T has already acquired advertising technology platform AppNexus to improve online video targeting. And AT&T executive John Stankey outlined a new trajectory for HBO that includes more investment and different kinds of content to better compete with Netflix.

“This changes nothing we’ll be doing over the next 30 days or the next 12 months,” Stephenson said. “We think the likelihood of this thing being reversed and overturned is really remote.”

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.

Source: Tech CNBC
Here's what the DOJ needs to happen to win its appeal against AT&T

Comments are closed.