A court decision this week allowing the multibillion-dollar merger of two media giants is getting mixed reviews.
While the Justice Department argued that letting AT&T join forces with Time Warner would lessen competition, U.S. District Court Judge Richard Leon said the government failed to prove it. According to Leon, Time Warner and AT&T view the other as being able to provide something they could not on their own, and merging would allow them to stop chasing companies such as Netflix and Amazon.
"My sense is that it's probably a good thing," says Daniel Lyons, a professor and visiting fellow at the American Enterprise Institute focusing on telecommunications and Internet regulation. "We've seen a wave of different types of vertical integration in the media space – some of it organic and some of it not – and I think a lot of it is being driven by the fact that companies like Netflix and Amazon have figured out that by producing their own content and delivering it to people, they can steal customers away from the traditional cable bundle."
As a result, Lyons says AT&T saw this as a way to do what their competitors are doing – "to try to get into the content and distribution business together through merger rather than through organic growth," Lyons adds.
Author and commentator David Dayen was disappointed in the ruling.
"I think that this is going to trigger a wave of consolidation not only across the media space and telecomm as well but really across most sectors of our economy," Dayen says. "The sweeping ruling here that certain types of mergers are almost just presumptively legal and allowable is really going to create a chilling effect for the Justice Department or the other anti-trust agencies to go after monopolization."
The $85 billion merger is one of the largest media deals ever, says The Associated Press.