Court Documents Explain Reasons Behind AT&T Merger Decision

A newly surfaced memorandum opinion filed alongside the recent ruling which allowed Time Warner and AT&T to merge without condition may provide some insight into the reasoning behind the decision. In effect, memorandum opinions are the collective opinions on the case from the judge’s perspective. In this case, those are the opinions of U.S. District Judge of D.C. Richard Leon and the memorandum was filed on June 12. Chief among the opinions provided, Judge Leon indicates that the current dominance of Google, Facebook, Hulu, Netflix, and Amazon has essentially left both AT&T and Time Warner isolated and unable to compete. The judge determined that both companies had serious obstacles to providing any sort of real competition, which could be easily overcome by both companies working together. Rather than forming multiple partnerships, Leon concluded, the companies would stand a better chance by utilizing their collective resources to innovate in terms of video, advertising, and wireless services.

Beyond that, Leon goes on to explain that the now merged companies were also at a disadvantage where targeted advertising is concerned and that the troubles were not at all helped by falling ad revenue for either company. More directly, the digital advertising revenues of either company’s biggest competition had long-since surpassed the ad revenue it was possible to generate on a television platform. With regard to Google and Facebook, the judge breaks things down a bit further. In particular, Judge Leon seems to have taken into account that for those two competitors, both content and platform for that advertising is basically provided at added little to no cost to the industry-leading companies. By bringing the two together, the judge reasoned, AT&T and Time Warner would be able to innovate new services and platforms to address the growing trend toward cord-cutting services.

The sentiments seem to nearly echo the arguments put forward by AT&T and Time Warner against the U.S. Justice Department. The U.S. authority had argued that partnerships would be more well-suited to address the companies’ individual shortcomings. Predominantly, the defendants’ arguments centered around the fact that AT&T is strong in terms of wireless and paid television customers. Those would, in turn, work to augment Time Warner’s massive content holdings with more effective targetted advertising. Partnerships, the companies claimed, would require too much “bargaining friction” with each new project or innovation.

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