Categories LATEST, Technology

AT&T – Time Warner deal can increase TV bills $436 million a year

It’s been almost a year since then-presidential candidate Donald Trump voiced his opinion on blocking the AT&T (T) – Time Warner (TWX) deal. Despite not having much intrusion from the President’s part, the deal is still yet to take off.  The deal that was initially expected to get cleared by the end of 2017, has now hit a fresh snag. The US Department of Justice (DOJ) argues that the proposed merger would drastically increase the total amount Americans would have to pay for TV services by a whopping $436 million.

Courtesy – Flickr

In the trial brief filed last week, the DOJ sued satellite TV titan AT&T, which owns DirecTV, to block its purchase of Time Warner. The lawsuit claims that the proposed merger would violate Section 7 of the Clayton Act, as it is a threat to competition. The act was passed in 1914 and bans business practices that tend to form monopolies.

Meanwhile, AT&T has opposed a set of estimations proposed by an economics professor Carl Shapiro from the University of California in Berkeley. In the antitrust trial that is expected to begin on March 19, Shapiro is said to be one of the government’s expert witnesses. According to AT&T, even if there is a price hike post-merger, customers would pay not more than 45 cents, indicating the deal would cause minimal consumer harm. AT&T sees this merger as an effective strategy to battle rivals like Comcast (CMCSA) and Netflix (NFLX) and increase the consumer base.

This mega-deal is what is known as a vertical merger as it involves two companies that are not direct competitors. Vertical mergers have never been blocked in the last 40 years.

Though there is a lot of uncertainty surrounding the deal, it is not sure whether this deal can survive the regulatory challenge.  Even without Time Warner, AT&T will continue to be an attractive investment.

Most Popular

What to look for when CVS Health (CVS) reports Q3 earnings

Healthcare company CVS Health Corporation (NYSE: CVS) is all set to report earnings next week, with Wall Street expecting a mixed outcome. The company has been facing challenges in certain

eBay (EBAY): A few factors that helped drive growth in Q3 2024

Shares of eBay Inc. (NASDAQ: EBAY) stayed green on Friday. The stock has gained 32% year-to-date. The ecommerce leader delivered revenue and earnings growth for the third quarter of 2024,

CVX Earnings: Chevron reports lower revenue and profit for Q3 2024

Energy exploration company Chevron Corporation (NYSE: CVX) on Friday announced third-quarter 2024 financial results, reporting a decline in net profit and revenues. Net income attributable to Chevron Corporation dropped to

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top