The Justice Department is appealing a judge’s ruling approving the merger of AT&T and Time Warner, according to court documents filed Thursday. The Justice Department sued to block the deal from going through in November of 2017, arguing that it would limit competition and raise prices. Judge Richard Leon ruled in AT&T’s favor in June, saying in a blistering verdict that the Department of Justice did not sufficiently meet its burden of proving that the deal would allow AT&T to harm rival TV providers. He declined to attach any conditions to the deal, a further blow to the DoJ. The judge also warned the Department of Justice against seeking a stay, strongly hinting that he did not think an appeal would be worthwhile.
With the merger approved by the judge, AT&T has already taken steps to integrate Time Warner into its business. It has been renamed WarnerMedia, and AT&T has rolled out a $15-a-month streaming service that heavily uses some of the content owned by WarnerMedia.
The Justice Department’s main argument against the merger was that by owning Time Warner’s content, which includes must-have channels like CNN, AT&T could raise prices for pay-TV rivals and keep costs prohibitive for online streaming services. The transition to streaming services, away from traditional cable, is one that’s costing pay TV companies millions of subscribers and billions in revenue every year.
With control over a significant portion of the content, AT&T is now in a good place to keep prices high among rivals and prevent streaming TV services from offering cut-price cable alternatives. With cheap home internet increasingly becoming a reality, cable companies are faced with the prospect of millions of subscribers cutting the cord over the next decade.
AT&T has already raised the price of DirecTV Now to $40 a month, up from $35, following price increases from other streaming services. AT&T’s expert witnesses claimed during the trial that merging with Time Warner would create efficiencies and allow the company to lower the prices charged to consumers.
During the trial, the Justice Department revealed emails from AT&T execs that show the telecoms company wanted to buy Time Warner to help keep the “cash cow” of cable alive. Daniel York, current CCO of the AT&T Entertainment Group and a former top exec at DirecTV, called content providers “shortsided whores” for dealing with other streaming services.