US DoJ throws $85 billion spanner in the works of AT&T-Time Warner

The US Department of Justice has decided to appeal the June 12 court ruling allowing AT&T’s $85 billion acquisition of Time Warner, it announced late on Thursday.

In a brief Notice of Appeal filed on July 12, the DoJ notified the District Court that it intends to bring the case to the Court of Appeals against the ruling that will allow AT&T’s planned acquisition of Time Warner to go ahead with no restrictions.

The US government, which had until August 12 to ponder an appeal, took a month to decide it would lodge an objection to the mega-acquisition. US entertainment industry news site Deadline sourced a copy of the Notice, signed by Craig Conrath, who was leading the government’s legal team during the trial. It doesn’t elaborate on the grounds upon which the appeal would be lodged, but the decision to appeal seems to have caught AT&T by surprise.

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” David McAtee, the operator’s General Counsel, said in a statement. “While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances.  We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals,” he blustered.

The ramifications of the potential appeal could hardly be greater — not only regarding the future of a newly-created WarnerMedia business, and whether it might need to decouple from its parent company, but also for the whole telecom and media industries. The boardrooms of Comcast and Disney will be full of sweaty palms (yuk!), as the outcome of the appeal will set a precedent for future vertical integration deals, including their bidding war for 21st Century Fox.

If the DoJ was to win the appeal, the US Solicitor General could bring the case to the Supreme Court, where the judges generally siding with President Trump are in the majority. Since the days when he was a candidate, Mr. Trump has been a vocal opponent to the merger, citing the danger of “too much concentration of power in the hands of too few.” However, such a decision would not be without a twist: Eriq Gardner, the Senior Editor at The Hollywood Report, discovered in a disclosure paper that John Roberts Jr, one of the Supreme Court Chief Justices, still holds Time Warner shares.

AT&T has been moving very fast after the June 12 ruling to integrate the two companies, from appointing executives to stamping its authorities over HBO, although it has decided to leave Turner Broadcasting, the owner of CNN among other assets, independent until February 2019. However, it has already broken at least one promise related to the deal: instead of making the service more affordable, it just raised the monthly bill for its DirecTV Now service by $5.

AT&T to HBO: if it ain’t broke, fix it anyway

US telco AT&T has wasted little time before detailing how it’s going to ‘improve’ premium video content maker HBO now that it owns it.

For decades HBO has set the standard for TV excellence via series such as The Sopranos, The Wire, Deadwood and Game of Thrones. But just imagine what it could have achieved with some telecoms suits calling the shots – the mind boggles. Well now we get to find out because AT&T has bought it and recently served notice that things are going to have to change around here.

Having completed its mega-acquisition of Time Warner just weeks ago, AT&T has sent the new head of its entertainment group, John Stankey, on a tour of its of its conquered territories, to leave them in no doubt there’s a new sheriff in town. This has taken the form of a sequence of ‘town halls’ and the New York Times managed to get hold of a recording of the HBO one.

“It’s going to be a tough year,” Stankey is reported to have said. “It’s going to be a lot of work to alter and change direction a little bit.” The assembled HBO execs could be forgiven to have felt a tad taken aback by this stance, given their company’s dominance of all-time great TV lists, but it looks like mere quality is no longer enough.

“We need hours a day,” said Stankey indicating that he wants HBO’s share of total viewing time to increase dramatically . “It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.”

In case a wholesale switch to quantitative KPIs wasn’t entirely self-explanatory, Stankey persisted. “I want more hours of engagement,” he demanded. “Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

If comments like that don’t get the HBO incumbents pumped then we don’t know what will. It’s no great surprise that AT&T views HBO content as merely the conduit for juicy data that it can use to more efficiently exploit its customers but to hear that ambition so brutally detailed so soon is somewhat jarring. The elephant in the room for new-look HBO is clearly Netflix, but it’s investing more than ever in quality content and Stankey would be rash to do differently.