Nation & World

Justice says approval of AT&T-Time Warner merger 'deeply flawed'

FILE PHOTO: An AT&T logo is seen at a AT&T building in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo
FILE PHOTO: An AT&T logo is seen at a AT&T building in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo

WASHINGTON — The federal government on Monday challenged a judicial decision allowing AT&T to purchase Time Warner, arguing to a federal appeals court in Washington, D.C., that the ruling suffered from “faulty logic” and ignored basic economic principles.

Calling the lower-court decision a “deeply flawed assessment of the government’s evidence,” the Justice Department claimed that the U.S. District Court for the District of Columbia had misunderstood the power dynamics at work when television distributors such as AT&T negotiate with TV programmers over content prices and terms.

The filing marks the government’s most comprehensive articulation yet of its appeal against the $85 billion megamerger, which closed in June and gave AT&T control over CNN, TBS, TNT and HBO, among other media properties.

AT&T claimed it needed the deal to compete with tech companies such as Facebook and Google.

Meanwhile, regulators had said the deal would indirectly lead to higher prices for consumers when AT&T used its control over Time Warner to demand higher content prices from rival TV services.

The Justice Department’s brief on Monday said Judge Richard Leon had gotten the case wrong when he determined AT&T was not likely to yank CNN, TBS and its sister channels off the air as a punishment against competitors that refused to pay higher prices.

That is beside the point, government regulators said.

“It is fundamental to the economics of bargaining that a party derives leverage from having the ability to walk away, even if it never actually does so,” the Justice Department wrote.

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