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Commercial Awareness Update - March 2019!
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<blockquote data-quote="Angel" data-source="post: 10000" data-attributes="member: 980"><p style="margin-left: 20px"><strong>4. <u>AT&T – Time Warner Merger Update (Angel) </u></strong></p><p></p><p style="margin-left: 20px"><strong>The Story: </strong><em>(in a timeline)</em></p> <ul style="margin-left: 20px"> <li data-xf-list-type="ul"><u>Oct 2016</u>: AT&T and Time Warner first announced plans to merge. The merger was valued at USD 85 billion.</li> <li data-xf-list-type="ul"><u>Nov 2016</u>: Such news did not garner newly elected US President Mr Trump’s favour. He thought that the merger risks putting ‘too much competition of power in the hands of too few’.</li> <li data-xf-list-type="ul"><u>March 2018</u>: Actions first filed by DOJ to block the proposed merger. Former President Bush-appointed Judge Leon gave green light to the deal.</li> <li data-xf-list-type="ul"><u>June 2018</u>:AT&T announced a successful acquisition of Time Warner.</li> <li data-xf-list-type="ul"><u>Nov 2018</u>: DOJ appealed against the merger on the basis that it would lead to ‘<em>higher prices and less innovation</em>’ for Americans. Because merger had <em>already </em>happened, the DOJ’s case is essentially asking the Court of Appeals (“<strong><em>COA</em></strong>”) to ‘unmerge’ the companies despite having combined operations for approximately 7 months.</li> <li data-xf-list-type="ul"><u>Dec 2018</u>: Representatives from both AT&T and Time Warner testified in the COA in Washington DC.</li> <li data-xf-list-type="ul"><u>Feb 2019</u>: COA rejected DOJ’s appeal. Following the decision, a representative of DOJ said that the DOJ have no plans to seek further reviews for the time being. Time Warner has since been renamed as WarnerMedia.</li> </ul> <p style="margin-left: 20px"><strong>Impact on businesses and law firms</strong></p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">It is important for M&A lawyers to understand the implications of antitrust lawsuits, especially one this big and rare. This case would be a bellwether for future M&A activities. On a wider level, these lawsuits brought on by the DOJ made history – it marked the first time in decades since the US government last intervened in private M&A activities.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">From the government’s perspective, the intervention is justified to prevent massive concentration of powers from falling into the hands of one. The combination of one of the world’s largest wireless telco companies with one of the world’s largest media and entertainment companies gives the entity too great of a bargaining leverage in the industry.</p> <p style="margin-left: 20px">Time Warner controls some of the biggest entertainment brands in the world. This includes CNN, HBO, Warner Brothers and many others. If the merger is successful, there is a risk that the AT&T can market its products through Time Warner’s content to consumers. Combined, the entity would have an expansive reach to many different business areas and culture, locally and internationally. This would greatly disadvantage other telco businesses as they cannot afford to achieve the same level of promotion. They can also collect data based on consumers’ viewership taste and potentially construct a digital advertising department to compete with FAANG companies such as Facebook and Google.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">There are also risks that smaller cable companies/ TV distributors/ related businesses may be coerced to pay more for the rights to carry popular channels and movies. These businesses can either absorb the costs to remain competitive but at a reduced profit or pass the cost to consumers. Regulators are also concerned with preserving healthy competition within an industry and the protect consumers. The successful merger risks stifling growth, innovation and efficiencies. Ultimately, the biggest beneficiary within the chain is the originator, AT&T- WarnerMedia.</p> <p style="margin-left: 20px"><strong><u>_________________________________________________________________________<u><strong>_____________________________<u><strong>_____________________________<u><strong>_____________________</strong></u></strong></u></strong></u></u></strong></p><p></p><p style="margin-left: 20px"><strong>5. <u>The Trend of Carmakers Increasingly Working Together (Flora)</u></strong></p><p></p><p style="margin-left: 20px"><strong>The story:</strong></p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">The automotive industry has seen an increase in competitors teaming up to prepare for an uncertain future. Last week BMW and Daimler announced a £880m partnership to develop a number of mobility services together. Honda invested £2.1bn in rival General Motors’ driverless unit. As well as Ford and Volkswagen agreeing to investigate ways of working on electric and autonomous vehicles together.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">It is unclear what the future of mobility is going to be. Some predict electric cars, ride sharing and autonomous driving radically changing how cars are used and a fall in ownership. The research and development to develop these new technologies costs billions so it makes sense to share the burden rather than duplicating. Problem for the industry is that its struggling to afford its own future. Teaming together will lower carmakers risks.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">Problem that having to overhaul their production processes fast. There is a danger of new players coming in who can be radically different in how they make and sell cars or transport services. For example, US firm Tesla has become the world’s number one manufacturer of plug-in passenger cars in little over 15 years, and the Chinese are making huge strides in developing electrics, backed by generous subsidies from the Chinese government. In addition, tech companies like Uber and Google’s driverless car business Waymo have created even more competition.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px"><strong>The impact on businesses and law firms:</strong></p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">These agreements are rarely exclusive or involve cross ownership and they tend to collaborate only in certain areas, while remaining competitors in others. Given the competitive nature of the industry, lawyers should be very careful with the wording of these agreements to ensure their clients remain in favourable position and prevent potential competition issues.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px">Full mergers between car brands seems unlikely due to the huge costs involved in aligning the production processes and marketing. Instead we can expect to see more rationalisation, with carmakers pulling out of unprofitable markets and forging more strategic pacts similar to Daimler and BMW. Legal expertise will be required for these restructurings.</p> <p style="margin-left: 20px"></p> <p style="margin-left: 20px"><span style="color: #b30000">That's all for this week! Let us know your thoughts by commenting below. Have a great week ahead, everyone! <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /> </span></p></blockquote><p></p>
[QUOTE="Angel, post: 10000, member: 980"] [INDENT][B]4. [U]AT&T – Time Warner Merger Update (Angel) [/U][/B][/INDENT] [INDENT][B]The Story: [/B][I](in a timeline)[/I] [LIST] [*][U]Oct 2016[/U]: AT&T and Time Warner first announced plans to merge. The merger was valued at USD 85 billion. [*][U]Nov 2016[/U]: Such news did not garner newly elected US President Mr Trump’s favour. He thought that the merger risks putting ‘too much competition of power in the hands of too few’. [*][U]March 2018[/U]: Actions first filed by DOJ to block the proposed merger. Former President Bush-appointed Judge Leon gave green light to the deal. [*][U]June 2018[/U]:AT&T announced a successful acquisition of Time Warner. [*][U]Nov 2018[/U]: DOJ appealed against the merger on the basis that it would lead to ‘[I]higher prices and less innovation[/I]’ for Americans. Because merger had [I]already [/I]happened, the DOJ’s case is essentially asking the Court of Appeals (“[B][I]COA[/I][/B]”) to ‘unmerge’ the companies despite having combined operations for approximately 7 months. [*][U]Dec 2018[/U]: Representatives from both AT&T and Time Warner testified in the COA in Washington DC. [*][U]Feb 2019[/U]: COA rejected DOJ’s appeal. Following the decision, a representative of DOJ said that the DOJ have no plans to seek further reviews for the time being. Time Warner has since been renamed as WarnerMedia. [/LIST] [B]Impact on businesses and law firms[/B] It is important for M&A lawyers to understand the implications of antitrust lawsuits, especially one this big and rare. This case would be a bellwether for future M&A activities. On a wider level, these lawsuits brought on by the DOJ made history – it marked the first time in decades since the US government last intervened in private M&A activities. From the government’s perspective, the intervention is justified to prevent massive concentration of powers from falling into the hands of one. The combination of one of the world’s largest wireless telco companies with one of the world’s largest media and entertainment companies gives the entity too great of a bargaining leverage in the industry. Time Warner controls some of the biggest entertainment brands in the world. This includes CNN, HBO, Warner Brothers and many others. If the merger is successful, there is a risk that the AT&T can market its products through Time Warner’s content to consumers. Combined, the entity would have an expansive reach to many different business areas and culture, locally and internationally. This would greatly disadvantage other telco businesses as they cannot afford to achieve the same level of promotion. They can also collect data based on consumers’ viewership taste and potentially construct a digital advertising department to compete with FAANG companies such as Facebook and Google. There are also risks that smaller cable companies/ TV distributors/ related businesses may be coerced to pay more for the rights to carry popular channels and movies. These businesses can either absorb the costs to remain competitive but at a reduced profit or pass the cost to consumers. Regulators are also concerned with preserving healthy competition within an industry and the protect consumers. The successful merger risks stifling growth, innovation and efficiencies. Ultimately, the biggest beneficiary within the chain is the originator, AT&T- WarnerMedia. [B][U]_________________________________________________________________________[U][B]_____________________________[U][B]_____________________________[U][B]_____________________[/B][/U][/B][/U][/B][/U][/U][/B][/INDENT] [INDENT][B]5. [U]The Trend of Carmakers Increasingly Working Together (Flora)[/U][/B][/INDENT] [INDENT][B]The story:[/B] The automotive industry has seen an increase in competitors teaming up to prepare for an uncertain future. Last week BMW and Daimler announced a £880m partnership to develop a number of mobility services together. Honda invested £2.1bn in rival General Motors’ driverless unit. As well as Ford and Volkswagen agreeing to investigate ways of working on electric and autonomous vehicles together. It is unclear what the future of mobility is going to be. Some predict electric cars, ride sharing and autonomous driving radically changing how cars are used and a fall in ownership. The research and development to develop these new technologies costs billions so it makes sense to share the burden rather than duplicating. Problem for the industry is that its struggling to afford its own future. Teaming together will lower carmakers risks. Problem that having to overhaul their production processes fast. There is a danger of new players coming in who can be radically different in how they make and sell cars or transport services. For example, US firm Tesla has become the world’s number one manufacturer of plug-in passenger cars in little over 15 years, and the Chinese are making huge strides in developing electrics, backed by generous subsidies from the Chinese government. In addition, tech companies like Uber and Google’s driverless car business Waymo have created even more competition. [B]The impact on businesses and law firms:[/B] These agreements are rarely exclusive or involve cross ownership and they tend to collaborate only in certain areas, while remaining competitors in others. Given the competitive nature of the industry, lawyers should be very careful with the wording of these agreements to ensure their clients remain in favourable position and prevent potential competition issues. Full mergers between car brands seems unlikely due to the huge costs involved in aligning the production processes and marketing. Instead we can expect to see more rationalisation, with carmakers pulling out of unprofitable markets and forging more strategic pacts similar to Daimler and BMW. Legal expertise will be required for these restructurings. [COLOR=#b30000]That's all for this week! Let us know your thoughts by commenting below. Have a great week ahead, everyone! :) [/COLOR][/INDENT] [/QUOTE]
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