AT&T Commits to Time Warner Deal Even as Judge Delays Deadline

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Credit: Patrick T. Fallon/Bloomberg

The Justice Department's antitrust lawsuit to block AT&T from buying Time Warner will go to trial March 19, a later date than the companies had sought to begin their epic legal fight with the government.

With the trial more than three months off, AT&T and Time Warner will have to extend their self-imposed April 22 deadline for completing the $85.4 billion deal. U.S. District Judge Richard Leon said Thursday in Washington that the companies should push back the cutoff date by 60 to 90 days to give him time to make a decision.

"We will promptly discuss the court's post-trial schedule with Time Warner," AT&T General Counsel David McAtee said in a statement. "We are committed to this transaction and look forward to presenting our case in March."

If approved, the deal would reshape the media landscape by uniting a telecom giant with the owner of CNN, Warner Bros., TNT, TBS and HBO. AT&T, the owner of DirecTV, is the largest pay-TV distributor, as well as a powerhouse in mobile phones and landlines. The Justice Department has argued that letting AT&T own the films and TV shows that flow down its pipes would harm consumers and competitors.

Under their current agreement, if AT&T and Time Warner fail to complete their deal by April 22, they can choose to extend the deadline or either party can walk away. If the judge blocks the deal, AT&T must pay Time Warner a breakup fee of $500 million.

"This is not a normal case from many perspectives," Leon said from the bench Thursday. He estimated the trial would take about three weeks. "This is going to be a lot of hard work and a lot of sacrifice."

The Justice Department sued to block AT&T's takeover of Time Warner on Nov. 20, saying the merger would mean higher television bills and fewer innovative entertainment options. The company has said a deal would pave the way for new advertising approaches that tailor messages to individual viewers.

The lawsuit suggests the government will take a hard look at other deals in entertainment. That's particularly relevant with Walt Disney and Comcast making competing offers to acquire billions of dollars entertainment and pay-TV assets from 21st Century Fox Inc.

The legal challenge—the first major antitrust enforcement action to be brought by the Trump administration—dealt a blow to a tie-up that appeared to be sailing toward approval as recently as October.

Makan Delrahim, the new head of the antitrust division under the Trump administration, had pushed for a sale of either Time Warner's Turner Broadcasting division, which owns cable channels including CNN, TNT and Turner Sports, or DirecTV, the satellite provider AT&T bought in 2015.

AT&T CEO Randall Stephenson said he wasn't willing to sell CNN to appease Washington and promised to fight the lawsuit, setting up a court battle that now won't be decided until the spring.

Delrahim was present for the opening hearing in his first lawsuit as the Justice Department's new antitrust chief. He sat at a bench behind the counsel table occupied by Craig Conrath and the department's other trial lawyers.

AT&T had sought a Feb. 20 date for the trial while government attorneys countered with May 7.

Citing his own congested trial calendar, the judge urged the parties Thursday to keep disagreements to a minimum, inviting the court's intervention only when necessary.

"We recognize this is an intensive burden for the court," AT&T attorney Daniel Petrocelli told the court, adding his side would do all it could to avoid "needless friction" with the government's lawyers. Petrocelli also said he and his co-counsel would relay to their clients the judge's insistence they move their deadline and the report back to Leon.

The next court date is Dec. 21.

"The people who are in are all in, including me," the judge said, counseling against anyone involved in the case taking vacations or days off in the run-up to the trial.

-- Bloomberg News

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