AT&T, U.S. Bracing for Time Warner Decision as Soon as Tuesday

(Bloomberg) -- AT&T Inc. could learn as soon as Tuesday whether it can finally move forward with its acquisition of Time Warner and put behind it a lengthy legal battle with U.S. antitrust enforcers over the $85 billion deal.

The company and the Justice Department are awaiting a decision from the U.S. Court of Appeals in Washington about the government’s effort to reverse a lower-court decision allowing the merger. Oral arguments were held in December.

Under an agreement with the Justice Department, AT&T promised to put Time Warner’s Turner Broadcasting in a business unit separate from AT&T’s DirecTV business. It also agreed to a firewall between the two. That agreement, which was intended to prevent a full integration of the companies if the government prevails in its appeal, expires Thursday.

Because the appeals court issues its opinions on Tuesday and Friday mornings, it would have to rule Tuesday on the Justice Department’s appeal before AT&T can end the separation agreement and proceed with the integration.

The appeals court is considering a June decision by U.S. District Judge Richard Leon rejecting the government’s case that AT&T should be prevented from buying Time Warner on antitrust grounds. Leon said the U.S. failed to show that AT&T would be able to raise prices for Time Warner programming sold to competing cable and satellite-TV companies, leading to higher prices for subscribers.

The decision could have far-reaching consequences for both sides. If the court rules for the Justice Department and sends the case back to Leon for reconsideration, it would cast a cloud over a deal AT&T says it needs to compete against rivals such as Netflix Inc. and Inc.

A loss for the government could affect how aggressive it can be in enforcing so-called vertical mergers between companies such as AT&T and Time Warner that operate in different parts of an industry supply chain.

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