‘Everything’s on the line’: AT&T’s showdown with DOJ over Time Warner finally gets a decision today

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A federal judge is expected to rule Tuesday on whether to block AT&T’s $85 billion Time Warner merger, in what has become America’s most closely watched antitrust trial in decades.

The opinion by Judge Richard Leon could determine AT&T’s future in digital entertainment as the company seeks to go toe-to-toe with tech titans such as Facebook, Google and Netflix. But the stakes are equally high for the Justice Department, which has not litigated a case of this kind since the Nixon administration. A court victory for the government, analysts say, could symbolize the beginning of a tough new era in antitrust enforcement. But an AT&T win could give pause to regulators — and perhaps deter them from blocking mergers in the future that might otherwise be deemed anticompetitive.

Though the Justice Department has sought to tamp down concerns about the AT&T case being a bellwether, analysts widely anticipate more deals to be announced in the event of an AT&T court victory, particularly mergers involving corporations that primarily operate in different industries. These types of so-called vertical deals are becoming more popular. In recent months, Verizon has purchased the digital media companies AOL and Yahoo. Amazon.com expanded its grocery business by buying Whole Foods. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.) Comcast, meanwhile, is gearing up to fight Disney for control over 21st Century Fox.

“Everything’s on the line now for the Department of Justice,” said Gene Kimmelman, a former DOJ antitrust official who now leads the consumer advocacy group Public Knowledge. “They either come out as enormous victors … or they’ll face an avalanche of new transactions if they lose this case.”

Analysts predict a wide range of possible outcomes in the trial. Leon could determine the merger poses a competitive threat and block the deal outright, siding with the Justice Department. He could rule for AT&T and approve the entire acquisition without conditions, making it possible for the deal to close by June 18. Or he could strike a middle ground, imposing his own changes to the deal or asking the two sides to help him tweak it.

No matter how he rules, the full implications will take time to digest — and will likely hold implications for a string of other mergers and acquisitions on the horizon. Leon has previously said to expect at least a 200-page written opinion.

The lengthy decision reflects the grueling six-week legal assault that government lawyers mounted against AT&T and Time Warner this spring in a dim, windowless Washington courtroom. Both AT&T and the Justice Department declined to comment for this story.

The merged firm, prosecutors argued, would anticompetitively unite AT&T’s massive distribution infrastructure — its cellular and wired broadband networks — with Time Warner’s premium content including HBO, Warner Bros. and Turner Broadcasting, whose assets include the cable channels CNN, TBS and TNT.

AT&T executives defended the merger in court as a major strategic shift for the telecom giant, one that could prove as significant as the company’s decision more than a decade ago to enter the market for broadband and mobile data. In reinventing itself for an age of streaming media, AT&T aspires to deliver more television content over Internet connections to mobile and digital devices. With the viewing data it gathers from smart TVs, computers, tablets and smartphones, AT&T plans to build a targeted advertising empire resembling that of the Web’s biggest ad giants.

That effort could be aided by another major milestone this week: The official repeal on Monday of the federal government’s net neutrality rules. The rules, targeted for elimination by the Federal Communications Commission in a vote last year, had banned providers like AT&T or Verizon from prioritizing their own content over that of other websites. And they had laid the foundation for more stringent — though now also repealed — privacy regulations governing ISPs’ handling of customer data.

Winning the antitrust case could allow AT&T to capitalize on that deregulation, analysts say.

“Consumer groups are worried that the court will give AT&T powerful new content, and that the FCC will let them monetize it in anticompetitive ways,” said Paul Gallant, an industry analyst at Cowen & Co. “But investors are more sanguine. They like the hedge of AT&T owning content.”

Antitrust attorneys litigating the Time Warner case relied on complex economic models and testimony from AT&T’s competitors to outline a nightmare scenario in which AT&T could allegedly use its newfound control over Turner Broadcasting to unfairly benefit DirecTV, AT&T’s own subscription television service.

Turner’s control over live sports, news and other desirable programming would encourage AT&T to seek more money for that content when licensing it to competing TV services, the Justice Department argued. Those higher prices would allegedly be passed along to consumers to the tune of hundreds of millions of dollars per year. Meanwhile, the attorneys said, DirecTV would reap rewards by luring away any customers dissatisfied with the price hikes at other cable companies.

“AT&T would not want Time Warner content distributed in ways that increase competitive pressure on DirecTV,” the government wrote in its closing brief to the court.

Attorneys for AT&T and Time Warner lashed out at the government’s antitrust claims, calling them “preposterous.” Thanks to new targeted advertising revenue, AT&T argued, the deal would lead to price decreases for TV viewers, not increases. And to highlight its good faith in content negotiations, AT&T pointed to 1,000 letters it sent to rival TV services last year committing to an arbitration process after the merger, in the event those competitors felt they were being overcharged for Time Warner content. Opponents of the deal said the arbitration offer was insufficient, though in his questioning in court, Leon expressed significant interest in it.

AT&T’s legal team sought to dismantle the Justice Department’s economic analysis of the deal, poking holes in research done by the agency’s star witness, a University of California economist named Carl Shapiro. Shapiro’s analysis failed to consider enough real-world examples of programming disputes, AT&T argued, instead drawing on surveys and long-term projections to arrive at the conclusion that consumers will be harmed by the merger.

Hanging over the trial was also the political shadow of President Trump, who has publicly and repeatedly criticized the merger as concentrating too much power “in the hands of too few.” Arguing that it was being unfairly singled out for punishment, AT&T briefly demanded that the Justice Department hand over White House communications logs that could prove whether Trump inappropriately directed the agency to block AT&T’s merger. But Leon denied that request, focusing narrowly instead on the core antitrust arguments in the case.

The high-profile case is widely viewed as a bellwether for other mergers waiting in the wings. Should AT&T be allowed to buy Time Warner, analysts say an arms race will follow in which companies of all stripes will seek to consolidate with other businesses. An acquisition involving 21st Century Fox is already in the works, with Comcast and Disney poised for a bidding war over Fox’s lucrative film and TV studios, cable networks and other assets. Meanwhile, T-Mobile and Sprint have announced a merger of their own.

Wall Street will be looking for clues in the AT&T decision as to whether the government is likely to challenge those deals.

“At the simplest level, the market will draw a conclusion as to whether this administration is laissez faire or interventionist when it comes to big deals,” he said.

By Brian Fung/WAPO

Posted by The NON-Conformist

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AT&T ANNOUNCES THOUSANDS OF LAYOFFS, FIRINGS JUST IN TIME FOR CHRISTMAS

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Oh the irony, its a bitch!

AT&T plans to lay off and fire more than a thousand workers starting early next year, according to local reports.

Across the Midwest, an estimated 600 workers were notified they were being laid off by the company on December 16, a week before AT&T announced it was doling out $1,000 bonuses to 200,000 of its employees in celebration of the Republican Party’s tax overhaul.

The telecommunications giant told the Chicago Tribune in a statement that the most of the affected workers are from its landline and other legacy service sectors, but the company did not say how many workers total would still be employed in 2018.

Technology improvements are driving higher efficiencies, and there are some areas where demand for our legacy services continues to decline, and we’re adjusting our workforce in some of those areas as we continue to align our workforce with the changing needs of the business. Many of the affected employees have a job offer guarantee that ensures they’ll be offered another job with the company, and we’ll work to find other jobs for as many of them as possible.

The announcement came days after the New York Post reported that the company “pink-slipped more than 700 DirecTV home installers.”

On Friday, the Post also reported that AT&T has recently laid off “215 high-skilled technician jobs in nine Southern states” and plans to fire nearly 700 workers in Texas and Missouri beginning in February.

Union representatives expressed concern and resentment toward the company.

“How can you lay people off and then give them $1,000 and say that there’s going to be more jobs available? I wish someone could tell me how that’s possible because I have to explain that to my members, and right now at this time of year, this is a difficult pill to swallow,” Joseph Blanco, president of Local 6360 Communication Workers of America Union in Kansas City, told Fox 4 on Thursday.

Randall Stephenson, CEO of AT&T, said in a statement that the GOP’s tax bill would improve the country’s economy and the company’s financial prospects.

“Congress, working closely with the president, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world. This tax reform will drive economic growth and create good-paying jobs,” AT&T chief executive Randall Stephenson said, according to CNBC.

Last year, senior executives at AT&T told The New York Times that “shrinking the [company’s] workforce by 30 percent is not out of the question.”

As reported by Reuters, AT&T is vying to acquire media conglomerate Time Warner Inc., but the Justice Department sued to prevent the $85.4 billion acquisition in November for fears that AT&T might charge rival networks “hundreds of millions of dollars more per year” for Time Warner’s catalog of movies and T.V. channels if the merger would stand.

Soon after the company announced it would give $200 million worth of bonuses, President Donald Trump praised the move as an indicator of how the tax bill could benefit American workers.

BY

Posted by The NON-Conformist

Cornball Video to make you feel better about Net Neutrality being destroyed

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Posted by Libergirl

The Heart of the Deal

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Image: crooksandliars.com

Late one night in January, 2005, Carly Fiorina sat in a hotel room in Davos, Switzerland, where she was attending the World Economic Forum, in a state of angry dismay. She was the C.E.O. of Hewlett-Packard, and she believed that, in an effort to undermine her, members of the board were leaking confidential information about the company to the press. She had instructed lawyers to question all the members, so that they could “come clean.” Now, on a conference call, they still denied the leaking. Two weeks later, the board fired her. As she writes in “Rising to the Challenge,” her latest memoir, “Fearing for their positions, they behaved in an unprincipled fashion and ousted me from mine.”

Others have portrayed events differently, attributing Fiorina’s termination to unhappiness over H.P.’s merger with Compaq. She had sold the deal brilliantly, amid a bitter proxy fight, but the execution was badly managed, and the value of the stock fell. All this might have been of interest solely to business-school case writers had not Fiorina unexpectedly risen to the top tier of Republican Presidential contenders, joining the two other non-politicians in the race, Donald Trump and Ben Carson.

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AT&T to acquire DirecTV in $48.5 billion deal

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Image: AP

 

AT&T plans to acquire satellite TV operator DirecTV for $48.5 billion, the companies announced Sunday, marking the latest in a series of mega-mergers that are reshaping the cable and telecom landscapes.

The deal would elevate AT&T, the second-largest U.S. wireless carrier, into a major player in the pay-TV business. The company would have 26 million video subscribers after combining DirecTV with its existing landline TV offering, U-verse.

That could help AT&T bundle video and Internet services to better compete with Comcast, which is making its own $45 billion bid for Time Warner Cable. In another sign of industry consolidation, SoftBank, fresh off its successful acquisition of Sprint, is reportedly lining up an offer for T-Mobile.

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Cops want logs of your text messages

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Liberal girl gets on me all the time about my love of guns and freedoms. This is another in the long line of abuses.  Can we have any privacy anymore, all in the name of national security. I’m pretty sure Lib gal doesn’t want her rights trampled on in this instance.

George Orwell painted a very scary picture in his novel, 1984. The book was meant as a warning, a dire picture that he wanted people to avoid at all costs. Unfortunately, it looks more and more like some people want to use it as a handbook for how to create their own idea of a perfect state.

The latest is from some law enforcement groups that are asking the United States Senate for a law that will require cellular service providers to store logs of your SMS text messages for two years. You know, just in case they want need those for future criminal cases:

As the popularity of text messages has exploded in recent years, so has their use in criminal investigations and civil lawsuits. They have been introduced as evidence in armed robbery, cocaine distribution, and wire fraud prosecutions. In one 2009 case in Michigan, wireless provider SkyTel turned over the contents of 626,638 SMS messages, a figure described by a federal judge as “staggering.”

Chuck DeWitt, a spokesman for the Major Cities Chiefs Police Association, which represents the 63 largest U.S. police forces including New York City, Los Angeles, Miami, and Chicago, said “all such records should be retained for two years.” Some providers, like Verizon, retain the contents of SMS messages for a brief period of time, while others like T-Mobile do not store them at all.

Now, note that they’re already making cases as it is. The problem is that they’re not making enough of them apparently. Look at some of those charges. While some of them are clearly criminal, even by the most libertarian definition of a crime, they all should require a bit more evidence than some text messages, right?

Maybe it’s just me, but I’m not overly fond of making things easier and easier for the police to prosecute me because of something that happens to be in a text message from a year earlier. After all, text messages don’t convey tone of voice, body language, or anything else that might show the real meaning of the words they’re seeing.

But so long as we make life easier for police, who cares about such triffling concerns?

By Tom Knighton/United Liberty

Posted by The Non-Conformist

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Why AT&T’s CEO Wants Higher Taxes

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8ab272802b12d23a4fa294219b2b7d5cAT&T customers, pay attention: your phone company is trying to raise your rates.

No, not your phone rates: your tax rates.

And therein lies a story.

If federal campaign contributions are any guide, the CEO and chairman of AT&T, Randall Stephenson, is, or was, a solid Republican. In February, he gave $30,800 to the Republican National Committee. In September, he gave $20,000 to a committee affiliated with Mitt Romney’s presidential campaign. There were no similar gifts from Stephenson to the Obama campaign or to the Democratic National Committee, according to Federal Election Commission records.

AT&T’s federal political action committee also gave $10,000 to the Romney campaign. The AT&T political action committee’s giving in the 2012 cycle favored Republican candidates, who received about $1.6 million, over Democrats, who received about $850,000, according to the Center for Responsive Politics.

So it was something of a surprise to see AT&T issue a statement on Friday afternoon from Stephenson calling for a federal budget deal that, he said, “will require a compromise involving an increase in both tax rates and revenue.”

Stephenson participated in a meeting last week with other business leaders and President Obama that was closed to the press. Maybe Obama, who is pushing for the tax rates to go up, was extraordinarily persuasive. After all, Romney and the Republicans—the ones to whom Stephenson and his company’s political action committee donated all that money—had been opposing increases in federal tax rates.

Stephenson’s statement said that failure to reach a compromise would “result in severe market disruptions,” and “a return to negative economic growth.” It’s only fair to take him at his word that that is the basis for his concern.

A skeptic might point out, however, that AT&T does a lot of business with the U.S. government. AT&T Government Solutions boasts that it employs “more than 4,000 scientists, engineers and analysts—many with security clearances” who “focus exclusively on the IT requirements of government.” One federal contract AT&T won last year had a potential value of $5 billion, which is real money even to a company as large as AT&T. The company, like other wireless phone providers, also earns revenue from the “Lifeline” program that provides subsidized cellphones—so-called Obama phones—to low-income customers. And AT&T has already seen what negative effects hostile government agencies can have on its business—when a Justice Department antitrust lawsuit and FCC opposition blocked AT&T’s takeover of T-Mobile, AT&T wound up paying T-Mobile a $4.2 billion “break-up fee.”

There’s a certain amount of irony here. The left spent the campaign season complaining that the Supreme Court’s Citizens United decision would open the floodgates for corporate involvement in politics. Yet now that the election is over, President Obama seems to be encouraging corporate executives to campaign for higher taxes.

Defenders of the Citizens United ruling have argued that customers would help check the political involvement of consumer-facing companies. What that means as a practical example in this case is that though I had been planning to switch my family’s two smartphone contracts from Sprint and Verizon over to AT&T, I’m hesitant to do so now that AT&T’s CEO is publicly campaigning for tax rate increases that I oppose.

The sad reality, though, is that the thousands of dollars that my business would mean to AT&T, or the millions of dollars that the business of other like-minded Americans would mean, are dwarfed by the value of a $5 billion government contract or winning the favor of a regulator with the power to approve or deny a multi-billion-dollar deal.

Good-government groups and newspaper editorialists spend a lot of energy worrying about the danger that corporate cash or influence will sway political decisions. The greater danger may yet be that the influence runs in the other direction, and that government money and power influence businesses to become presidential cheerleaders, leaving America not only with higher tax rates but with a Potemkin private sector.

By Ira Stoll

Posted by The NON-Conformist

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