Final briefs in the D.C. Circuit Court of Appeals case are due Oct. 18, according to terms agreed upon by both sides and disclosed in todays DOJ filing in the case, with oral argument soon following. (Read the full filing HERE.) “Because the United States believes that oral argument would substantially assist the Courts consideration of this complex case, we also request oral argument as soon as practicable after briefing is complete,” the filing says. The DOJ “seeks a swift correction of the district courts errors,” the brief says, later adding, “AT&T and Time Warner have now closed their merger, but every day that they are allowed to combine aspects of their businesses more deeply will make it more difficult for this Court and the district court on remand to unwind the merger and preserve competition.”
As agreed by all parties before the merger officially closed last month, AT&T will maintain “certain status quo conditions” until the end of any appeal or February 28, 2019, whichever comes sooner. The company quickly rolled out a new name and logo for the entertainment assets, now known as WarnerMedia, but has not made other sweeping organizational moves in the weeks following the decision.
While last Thursdays one-page notice of appeal was enough to send shockwaves through the industry, which assumed it was on the other side of the two-and-a-half-year ordeal, todays brief offers more context. As was widely expected, the government is sticking to its belief that U.S. District Judge Richard J. Leon got it wrong when he sided with AT&T on June 12.
“In approving the merger, the district court rejected fundamental principles of economics, creating uncertainty that will have an outsized effect on vertical merger analysis,” the filing said. “The United States therefore brings this appeal and seeks a swift correction of the district courts errors, in order to preserve competition and clarify the proper analysis of vertical mergers.”
AT&T execs are no doubt on board with the idea of a speedy process. CEO Randall Stephenson, interviewed by CNBC the morning after the DOJ signaled plans to appeal, lamented that “the meter is running” in terms of legal costs, and has been since the deal was proposed in October 2016.
While most Wall Street analysts do not put much stock in the likelihood of a DOJ victory, the hangover of the protracted legal battle is unwelcome news for investors.