The ‘Star Wars’ Defense: Feds, AT&T and Time Warner Bicker in Juicy Pretrial Filings

Antitrust proceedings might not sound like the sexiest spectator sport, but the Department of Justice and hopeful couple AT&T and Time Warner ratcheted up the drama in legal filings on Friday, ahead of their looming showdown in court.
The government floated a conspiracy theory that the combined companies will hold content hostage — Warner Bros. movies and HBO’s “Game of Thrones” would be among the hostages in this scenario — in order to snuff out smaller competitors like YouTube.
Lawyers for AT&T and Time Warner said the DOJ was blithely unaware of the competitive market for video product, and would stifle growth in entertainment media if they successfully block the planned $85 billion merger when proceedings start on March 19.
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The DOJ hilariously called the argument “the ‘Star Wars’ defense,” saying AT&T and Time Warner’s assertion that “everything the government is telling the Court is stale and out of context–it is from a long time ago in a galaxy far, far away.”
“Not so,” the filing continued. “To the contrary, as will be shown at trial, the government is challenging this merger to address the real concerns of real people who populate the real marketplace today. And tomorrow as well, since the acquisition would give AT&T a new tool to slow down the development and growth of disruptive online competitors in the future.”
The DOJ implied this scheme to slow competition would be executed alongside fellow giant Comcast and it’s vertically integrated NBCUniversal.
“Unlike an independent Time Warner, the merged firm would share with Comcast a strong interest in slowing or blocking disruptive new entry,” the filing said.
The companies said the rise of streaming services provided by companies like Netflix, Amazon and Google is “pushing all players in the market to respond in numerous ways” to please customers.
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“There is no fact-based evidence that this merger will harm competition,” AT&T and Time Warner’s counsel wrote. “Nothing will be withheld from competitors; consumer prices will not go up. To the contrary, the government now concedes it would not be profitable for the new company to withhold its television networks from pay-TV distributors and that the new company’s prices to its own television customers will go down. As a result, the government’s suit to block this merger is not only baseless in fact, but it is affirmatively contrary to consumer welfare, making it difficult for the government even to allege a viable antitrust claim, much less prove one.”
The Justice Department first filed a lawsuit to block the deal in November, arguing that the merger violates antitrust law because it “would result in fewer innovative offerings and higher bills for American families.”
A major motivator of the justice department’s beef with the merger was widely reported to stem from President Donald Trump’s displeasure with CNN, the news network owned by Time Warner property Turner Broadcasting.
Here are five things you need to know about the landmark antitrust case. Read the AT&T-Time Warner brief and the DOJ brief below.
Ashley Boucher contributed to this report.

Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion — from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here’s a rundown of the biggest.

10. Disney buys a minority stake in BAMTech
Price tag: $1 billion
In August, the Mouse House announced that it paid $1 billion for a 33 percent stake in streaming video technology company BAMTech, which was spun off from Major League Baseball’s MLB Advanced Media. Disney plans to use BAMTech’s technology to launch a standalone ESPN streaming service – but without the same content as linear ESPN.

9. Dalian Wanda Group buys Dick Clark Productions
Price tag: $1 billion
The real estate and entertainment conglomerate owned by China’s richest man continues to snap up showbiz companies by the billion, acquiring the Golden Globes and American Music Awards producer for a cool $1 billion earlier this month.
Dick Clark Productions

8. Rovi acquires TiVo
Price tag: $1.1 billion
Video technology firm Rovi Corp., bought the pioneering live-TV recording tech company for $1.1 billion in a deal that was finalized in September. After the deal was complete, Rovi adopted the better-known TiVo name.
Getty Images

7. AMC Theatres buys Carmike Cinemas
Price tag: $1.2 billion
Wanda-owned AMC Theatres acquired Carmike, the U.S.’ fourth-largest exhibitor, forming the biggest theater chain in the country with more than 600 theaters. That surpasses Regal Entertainment, which operates 565 locations.

6. AMC Theatres buys Odeon & UCI Cinemas
Price tag: $1.2 billion
AMC also added Odeon & UCI Cinemas, Europe’s biggest chain, to its ever-expanding suite of cinemas. AMC will rename the company to Odeon Cinemas Group and maintain its London headquarters.
AMC/Odeon & UCI

5. Dalian Wanda Group buys Legendary Entertainment
Price tag: $3.5 billion
Wanda was responsible for the first megadeal of 2016, when it acquired the “Jurassic World” production company for $3.5 billion. Legendary lost $500 million in 2015, but its action-packed fare such as “Warcraft” is popular in China’s fast-growing movie market.

4. Comcast’s NBCUniversal buys DreamWorks
Price tag: $3.8 billion
The blowout success of animated films like “Zootopia” and “Finding Dory” was one of the stories of 2016, and NBCU doubled down on the genre by adding the “Kung Fu Panda” and “Shrek” studio to its fold.

3. Lionsgate merges with Starz
Price tag: $4.4 billion
The “Hunger Games” studio and premium cable channel announced their merger plans in June, a year after telecom billionaire and major Starz shareholder John Malone bought a stake in Lionsgate. Starz will become an independently run subsidiary of Lionsgate once the deal is officially approved.

2. Verizon buys Yahoo
Price tag: $4.8 billion – or maybe less
The embattled Internet 1.0 company finally found its lifeboat, selling its core business to Verizon for $4.8 billion in July, eight years after rejecting a $45 billion bid from Microsoft. But after the extent of Yahoo’s 2014 hack was revealed, Verizon was pushing for a $1 billion discount, and has been taking a second look at the deal.

1. AT&T agrees to acquire Time Warner
Price tag: $85.4 billion
AT&T agreed to buy Time Warner, combining two century-old companies to create a content and distribution powerhouse in the biggest media deal since the ill-fated 2000 AOL-Time Warner merger. One caveat: Donald Trump, who has been an outspoken critic of Time Warner’s CNN, had threatened to block the deal. However, a Wall Street-friendly Republican Congress could provide a smoother path.

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Rewind 2016: From China’s Dalian Wanda Group to AT&T, deep-pocketed buyers were chasing content all year

Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion — from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here’s a rundown of the biggest.

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