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Speaker 1: It will be the biggest corporate acquisition of the year

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Speaker 1: if it goes through. A T and T s pending

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Speaker 1: eighty four point five billion dollar acquisition is not only massive,

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Speaker 1: it's controversial and political. Time Warner share has plummeted after

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Speaker 1: Wall Street Journal reporter that the US Justice Department is

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Speaker 1: preparing for litigation in case it decides to sue to

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Speaker 1: block the deal, but Bloomberg Intelligence litigation analysts say it's

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Speaker 1: more likely than not that the deal will close, joining

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Speaker 1: us to sort this out. As Daniel Lyons, a professor

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Speaker 1: at Boston College, dan, the Justice Department routinely prepares lawsuits

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Speaker 1: to block major deals even while it's negotiating settlements, and

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Speaker 1: it's rare for the d o J to litigate over

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Speaker 1: a vertical merger. So what's your analysis of the situation. Yeah,

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Speaker 1: I think that's right. Um. I think the surprising thing

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Speaker 1: here isn't that the Department Justice is preparing the lawsuits

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Speaker 1: you said. I think that's sort of common practice. One,

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Speaker 1: it gives the Justice Department a little bit more leverage

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Speaker 1: in negotiating with a T and T and too, it's

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Speaker 1: the necessary precursor to filing a case. Uh in plan

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Speaker 1: be in case the deal winds up not going through.

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Speaker 1: That having been said, I think the surprising thing here

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Speaker 1: is that the details leaked out to the public that

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Speaker 1: somebody had justices made a decision to UH issue the

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Speaker 1: to let this be known as a negotiating tactic or

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Speaker 1: for some other reason. Well, Daniel, why why would they

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Speaker 1: do that? Well? One reason is, UM, if the agreement

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Speaker 1: is actually stuck up on a handful of particulars, it

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Speaker 1: gives them a little bit of leverage by using the

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Speaker 1: bully pulpit right going out to the public and saying,

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Speaker 1: you know, if you don't come to UH agreement on this,

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Speaker 1: you don't gree to our terms, then we may wind

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Speaker 1: up going ahead with plan being filing a lawsuit UH

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Speaker 1: to extent that spooks investors, and it seems like it

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Speaker 1: may have given the stock price it may cause the

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Speaker 1: company to give a little more than otherwise would Daniel?

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Speaker 1: What antitrust issues does this raise and can they be remedied?

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Speaker 1: So that's a really good question, and right Typically when

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Speaker 1: the d o J is looking at a merger, it's

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Speaker 1: something like um when Staples tried to apply Off tried

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Speaker 1: to buy Office Max at a horizontal merger, where one

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Speaker 1: company is buying a competitor, and the concern is that

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Speaker 1: you're reducing the number of choices. A vertical merger offers

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Speaker 1: sort of different issues, because when a T and T

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Speaker 1: purchases Time Warner, it's not removing a cable provider from

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Speaker 1: the market. Rather, it creates incentives for a T and

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Speaker 1: T to leverage, strengthen one area programming, to try to

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Speaker 1: get an unfair advantage over its competitors in the cable

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Speaker 1: distribution space. The real concern is that a T and

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Speaker 1: T does something like, for example, lock up HBO and

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Speaker 1: say from now on, if you want HBO, you can

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Speaker 1: only get it if you buy a T and TU

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Speaker 1: Verse or UM Direct TV, or in a maybe less nefarious,

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Speaker 1: less obvious way to raise the price of HBO to competitors,

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Speaker 1: so that Comcast or Hulu would have to pay more

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Speaker 1: for HBO content than a T T paste it self

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Speaker 1: for that content. Well, so, how have um have there

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Speaker 1: been examples of vertical mergers like this that have remedied

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Speaker 1: those kinds of problems? Yeah? So the closest analogies of

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Speaker 1: this one would be the two thousand eleven UH Comcast

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Speaker 1: NBC deal, where Comcast purchased UH the NBC Universal Bundle

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Speaker 1: of Businesses from General Electric. It was the same sort

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Speaker 1: of idea, right a cable company was purchasing upstream content

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Speaker 1: in order to UM find synergies between programming and distribution.

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Speaker 1: At that time, the Justice Department approved it, but approved

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Speaker 1: it with a number of conditions that were what we

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Speaker 1: would call behavioral in context. Right UM restrictions that were

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Speaker 1: put on the combined entity that if they were violated,

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Speaker 1: would allow the Justice Department to go to court. And

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Speaker 1: a lot of these restrictions had to do with making

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Speaker 1: sure that you offered the NBC package of UH programming

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Speaker 1: programs right the content from NBC the network and the

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Speaker 1: various cable channel that the company owned, to make sure

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Speaker 1: those were being made available to Comcast rivals on the

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Speaker 1: same terms as Comcast, and in particular making sure that

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Speaker 1: they were being made available to UH new Internet based

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Speaker 1: UH distribution systems like direct TV now and UH PlayStation

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Speaker 1: view UM so that Comcast couldn't use control of programming

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Speaker 1: to stop this new form of competition coming about Daniel,

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Speaker 1: what do we know about the new head of the

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Speaker 1: Antitrust Division and whether he might have some kind of

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Speaker 1: personal opposition to a deal like this, so UM making

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Speaker 1: del Raheem was the recently confirmed as the new Assistant

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Speaker 1: Attorney General for Anti trust. He's a well known player

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Speaker 1: in anti trust law, so it's generally known as a

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Speaker 1: straight shooter and someone who is likely to enforce the rules. UM.

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Speaker 1: One uh interesting aspect about him that he brings to

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Speaker 1: this discussion is that he has in the past been

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Speaker 1: on record as saying he must prefers structural remedies to

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Speaker 1: behavioral remedies. So what I mean by that is rather

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Speaker 1: than the type of deal that we see in the

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Speaker 1: Comcast NBC merger right where the company is allowed to

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Speaker 1: go forward with some restrictions that some rules that if

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Speaker 1: they violate those rules could go to court. UM, he

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Speaker 1: was in favor of structural remedies rather than trusting you

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Speaker 1: to trusting the new combined company to obey the limits

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Speaker 1: on them. Uh, instead requiring the company to divest certain

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Speaker 1: assets so that it can't behave anti competitively. UM. So

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Speaker 1: it's not clear to me how that would work in

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Speaker 1: this context. A number of people have floated the idea

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Speaker 1: that maybe the combined a T. T, Time Warner and

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Speaker 1: Empire would have to spin off, say CNN, we're gonna

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Speaker 1: have to leave it there, Daniel, we will be talking

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Speaker 1: more about this, I'm sure that's Daniel Lyons, professor at

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Speaker 1: Boston College Law School, coming up on Bloomberg Law. The

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Speaker 1: Justice Department's investigation to interest rate manipulation at global ranks,

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Speaker 1: banks reaching to executives, Weeds