On Tuesday, a federal judge approved the merger of AT&T and Time Warner without any restrictions. This was a blow to the Justice Department, which opposed the merger. So, what’s next with the AT&T Time Warner merger approved? Will this open the floodgates to other big mergers? And will the merger positively or negative affect consumers? Also, will the merger work? The results of the AOL and Time Warner merger were terrible. Click here to read more about that merger.
To examine the current merger, we turn to the reactions (opinions) of two sources.
Reactions to AT&T Time Warner Merger Approved
From Bill Crandall, Founding Partner and Chief Marketing Officer at Steadman Crandall Business Development, LLC:
“When I first read about the proposed merger/acquisition between AT&T and Time Warner, I immediately thought of Brown Shoe Co., Inc. v. United States. That was a major antitrust case I learned about from my studies at Hofstra University’s Zarb School of Business. And it was a very complicated case in terms of ‘vertical’ and ‘horizontal’ anti-competitive issues. The Brown Shoe case redefined the rules fought in courts ever since.”
“What I find most interesting about the favorable AT&T court ruling is that it took so long. The DOJ, FTC, and FCC had no problems with the more recent Disney/ABC merger. Or with the Comcast/NBC Universal merger. Yet, the AT&T/Time Warner merger became a major issue. With the Tuesday ruling, broader creative and news CONTENT becomes available for more consumers. Where. When. And however they want it. Competitive pricing, as always, will ultimately find its way. Ergo, ‘market equilibrium’ and NO ‘restraint of trade’.”
From James B. Stewart, writing for the New York Times:
“For many antitrust experts, it was time — no matter the outcome. With vertical mergers like AT&T and Time Warner, “antitrust law is stuck in the 1980s,” said Tim Wu, a professor at Columbia Law School. He calls for more vigorous antitrust enforcement against vertical mergers. A chorus of antitrust experts also call for a rethinking of the laissez-faire approach to vertical mergers. And Judge Leon’s ruling will likely amplify their critique.”
“The most immediate impacts of the ruling on Tuesday are the removal of an obstacle to a mega-merger. And the likely bursting of a dam of mergers waiting the decision. But the most important aspect is that the ruling embraces that markets are inherently competitive. That a firm’s dominating one market cannot be leveraged into another. And that market success comes from maximizing consumer welfare. Not from anti-competitive behavior. To wit, vertical mergers produce efficiencies passed on to consumers in the form of lower prices, higher quality, or both. But the emergence of Netflix, Amazon and Hulu loomed large in his analysis. ‘I simply cannot evaluate the government’s theories,’ he wrote in his opinion, without considering ‘the dramatic changes that are transforming how consumers are viewing video content.’”
To read more from Stewart, click the image.