Jun 13, 2018

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1 big thing: AT&T-Time Warner could set off merger mania
Illustration: Sarah Grillo, Caresse Haaser/Axios

AT&T's court victory Tuesday allowing its purchase of Time Warner is expected to usher in a period of industry consolidation — particularly between media, tech and telecom companies.

Why it matters: Hundreds of billions of dollars worth of potential deals were at stake pending this decision. With Judge Richard Leon's ruling, it's not just AT&T seen as getting a green light, report Axios' David McCabe and Sara Fischer.

The first thing to watch for is a fight between Comcast and Disney over 21st Century Fox's entertainment assets — like FX, National Geographic and its movie studios. Comcast had said it planned to make a bid, but multiple reports suggested it delayed a formal bid until a decision came down in the AT&T and Time Warner case, since the deals were so similar.

  • Next, Disney is expected to submit a counter offer.
  • BTIG media analyst Rich Greenfield and others have suggested that Fox has the incentive to take the highest bid possible that will pass regulatory approval — whether that be from Disney, Comcast or someone else.

What else to expect: The ruling will put more attention on both similarly-structured vertical mergers — deals between companies in different markets — and horizontal mergers, deals between companies in the same market. Some of the big pending deals include:

  • T-Mobile U.S. and Sprint have agreed to merge to form a $146 billion company that it says could take on larger rivals in the cellphone business.
  • CVS Health agreed to buy Aetna last year for $69 billion in cash and stock to create a new pharmaceutical and insurance behemoth.
  • Cigna reached a deal to buy Express Scripts for $52 billion earlier this year to compete with other vertically-integrated health care companies, like a potential CVS Health and Aetna combination.
  • There are already signs that companies with deals under review are reacting to the AT&T-Time Warner ruling. The Washington Post reported on Tuesday that it will become part of T-Mobile and Sprint's pitch to antitrust regulators.

The bigger picture: Just because AT&T gets to buy Time Warner doesn't guarantee that every similar deal will go through. Indeed, Leon insisted as much at the end of his 172-page opinion, writing “the temptation by some to view this decision as being something more than a resolution of this specific case should be resisted by one and all!”

Go deeper: Read the full post here.

2. Double whammy: net neutrality + AT&T-Time Warner

Illustration: Sarah Grillo/Axios

The court's thumbs up for the AT&T-Time Warner deal, combined with the end of net neutrality rules, has the potential to reshape the internet media landscape.

Why it matters: Together, these events of the last 48 hours could open a path to a network that's very different from the freewheeling one you grew up with or first got to know in the 1990s or 2000s.

Worst case: In this scenario, the giant companies that supply your internet access (like AT&T, Verizon and Comcast) try to outflank the giant companies that provide most of your online content and services (like Google, Facebook and Apple) — and consumers lose out.

Who owns what: Here's how much will be in the hands of just three companies:

  • AT&T will own its own cellular, home broadband and telecommunications services, along with Time Warner and DirecTV.
  • Comcast owns its own cable TV, broadband and fledgling cell service along with NBC Universal.
  • Verizon owns its own wired and wireless broadband, Fios TV service as well as AOL, Yahoo, HuffPo and other online brands.

Between the lines: The service providers all say they don't want to limit choice, and that they have no intention of blocking or prioritizing content.

  • But the concern is that once companies have vertical control over home internet and cable TV service, mobile data service, and multiple content sources, the temptation to pursue such strategies (in the past dubbed “synergies”) could be irresistible.

But, but, but: The tech industry regularly experiences waves of mergers, and much of the time they flop. (See: Time Warner’s last world-changing hookup, with America Online in 2000.)

Go deeper: Read the full post here.

3. Justice Department weighs appeal

Makan Delrahim after Tuesday's ruling. Photo: Aaron P. Bernstein/Getty Images

The Justice Department has days to decide whether to continue its lengthy fight against AT&T's acquisition of Time Warner — but an appeal may not stop the deal from closing in the meantime.

The bigger picture: DOJ doesn't just have to worry about this deal, but about every future antitrust case where this ruling could constrain its ability to act.

  • Leon surprised the courtroom Tuesday when, after announcing his decision, he told the Justice Department it would be "manifestly unjust" for them to ask for a stay, as a hold on the deal before an appeal is known.
  • "The court has spoken," he said.
  • Makan Delrahim, the Justice Department's top antitrust official, was noncommittal about whether he would follow Leon's advice as he left the courthouse after Tuesday's ruling.

The other side: AT&T says it still expects the deal to close ahead of the deadline next week.

More: David and Sara describe it a bit further here.

4. The scene: AT&T-Time Warner's courtroom

While the impact of the AT&T-Time Warner case is the big deal, its means of delivery was also something to behold. During the judge's presentation of his decision, those inside his courtroom couldn't text, blog or tweet, while those outside could only speculate on what was transpiring.

Inside the courtroom: With the room's most visible clock stuck at five minutes past five and a total ban on electronics, those inside the courtroom felt isolated from the rest of the world throughout the trial. But on Tuesday, it felt hermetically sealed, according to David, who was covering the trial and the ruling.

  • Those present for the ruling were told any powered-on electronics would be confiscated and that nobody would be allowed to leave until Leon finished issuing his ruling.
  • Even the tiny square windows on the courtroom’s main doors, the only ones in the entire space, were covered up. The judge warned against audible reaction to his ruling, so the crowd — and their devices — remained silent.

Outside the courtroom: The digerati mused about what was taking place inside Leon's courtroom, while nervous editors checked the competition to make sure no one had managed to sneak out a scoop. Here are some of the best tweets:

  • Axios' Dan Primack: "I can't believe that no reporter has faked a serious illness yet to get out of that room."
  • NYT's Mike Isaac, responding to Primack: "Someone should just straight up take a dump in their pants. Judge gotta eject you then."
  • Marketplace's Kai Ryssdal called it "Schroedinger's merger," responding to a tweet noting that the future of media had already been decided, but only a sealed courtroom knew the outcome.

The big picture: With airplanes, hospitals and nearly and every other modern gathering point up, there aren't many places left where people are forced to exist without the internet and mobile devices. Only the far wilderness, federal courts and prisons come to mind.

5. Fortnite arrives on Nintendo Switch

In one of the bigger announcements to come from the E3 video game show in Los Angeles, Nintendo announced Tuesday that Fortnite was coming immediately to its Nintendo Switch portable console.

Why it matters: The move brings the hottest title in video games — it has 125 million players in less than a year — to the hottest console.

Yes, but: Sony is blocking users from playing on its PS4 consoles and the Nintendo Switch, limiting some of the impressive cross-platform play that Fortnite has enabled, The Verge reported.

6. Take Note

On Tap

  • E3 continues in Los Angeles.
  • CEBIT continues in Hanover, Germany.

Trading Places

  • Longtime Microsoft executive Ryan Gavin has joined Amazon as head of AI and ML for its web services business. Gavin spent 20 years at Microsoft, most recently as a general manager on the Surface team.


  • Scooter company Bird is looking to raise around $200 million at a $2 billion valuation, sources told Axios' Dan Primack. The move comes just weeks after it raised $150 million at a $1 billion valuation and three months after another funding that valued it at $300 million.
  • ZTE resumed trading in Hong Kong on Wednesday after a two month suspension, but fell as much as 41% amid its deal with the U.S. government, Reuters reported.
  • Qualcomm plans to hang on to its server chip business president Cristiano Amon told Reuters. However, it's cutting jobs and narrowing the unit's focus. (Bloomberg had previously reported it was eyeing a sale of the unit.)
  • British retailer Dixons Carphone announced a major data breach, per BBC Technology.
  • Toyota is investing $1 billion in Grab.
  • Tesla plans to cut 9% of staff
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