AT&T and Time Warner win legal battle, confirming the merger

Ivan Schwartz
June 13, 2018

Petrocelli told Judge Leon that their estimates show FAANG is worth $3 trillion collectively, while an AT&T-Time Warner entity post-merger would be worth $300 billion. The $85.4 billion merger was first put forth in October 2016, but a deal like this was met with intense scrutiny from regulators, as it will have major implications on the media landscape moving forward.

A federal judge on Tuesday gave a ringing endorsement to AT&T Inc's planned acquisition of Time Warner Inc without any conditions, opening the door for companies such as Comcast Corp and Verizon Communications Inc to pursue deals to buy creators of media content.

The case - one of the most closely watched antitrust trials in decades - is viewed as a bellwether for other deals waiting in the wings.

Judge Leon has said he will issue his decision on AT&T's proposed deal today.

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties.

It is about tectonic shifts in the media and technology industries. "I hope the government has the wisdom and courage", not to seek a stay, he said.

USA district judge Richard Leon dismissed the antitrust case brought by the justice department last November, the culmination of a 20-month ordeal that has seen the deal attacked by Donald Trump, critics of media consolidation and consumer groups. That leverage would allow AT&T to raise prices for Time Warner content, with those costs being passed on to consumers, according to the Justice Department.

The ruling is a major setback for the Justice Department and its antitrust chief, Makan Delrahim, whose decision to sue to block the deal broke with convention.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.

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The industry is now turning its eyes to another potential megamerger - the fight between Comcast and Disney to acquire 21st Century Fox.

Judge Richard Leon of the US District Court for the District of Columbia said at a hearing that he has found, after a six-week trial, that the deal does not violate antitrust law and can proceed.

"This will be a blockbuster summer for media mergers", said Mary Ann Halford, senior adviser to OC&C Strategy Consultants. The company could offer to sell off assets that the government says could contribute to anti-competitive practices.

Time Warner owns CNN, HBO, Warner Bros.

Some critics of President Trump have questioned whether the case was brought as political payback against Time Warner's CNN for unfavorable coverage of President Trump, who often called the cable news channel "fake news".

Fox shares rose 5.2% in after-hours trading Tuesday, while Comcast fell as much as 4% and Disney dropped as much as 2%.

The acquisition means AT&T will be the nation's top pay-TV distributor.

The mega-merger is a high-stakes bet by AT&T Inc. on the synergy between companies that produce news and entertainment and those that funnel it to consumers - who spend more time watching video on phones and tablets and less time on traditional live TV on a big screen.

For its part, the department was not thrilled with the outcome.

Other reports by GizPress

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