Judge approves AT&T's merger with Time Warner | AT&T

Virginia Carson
June 13, 2018

U.S. District Judge Richard Leon ruled that the combined companies do not pose a danger to consumers, a decision that amounts to a resounding win for the two companies.

The judge in a scathing opinion urged the USA government not to seek a stay of his ruling, saying it would be "manifestly unjust" to do so and not likely to succeed. I hope and trust the Government will have the good judgement, wisdom, and courage to avoid such a manifest injustice. "We strongly urge the Justice Department to appeal this decision all the way to the Supreme Court if necessary". Stephenson was relieved. So was outgoing Time Warner CEO Jeff Bewkes, who also learned the news from a phone call.

AT&T says it plans to move forward with the deal in less than a week, leaving a small window of time for the justice department to file an appeal. "This deal will accelerate content and streaming initiatives between Time Warner properties and AT&T and be a major shot across the bow to other cable and wireless players with all these assets under one hood".

Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge Leon of the U.S. District Court for the District of Columbia rejected their bid to force the disclosure of White House communications that might have shed light on the matter. Most analysts believe that the decision is likely to set off a wave of takeovers and consolidation in tech, telecom, and media.

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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.

AT&T, meanwhile, saw its share price fall 2.1 percent, to $33.63, after the ruling was revealed. "There's a real opening for Comcast to come in with a very significant premium bid to where Disney is now".

A Comcast spokesperson declined to comment.

The AT&T-Time Warner merger is in direct response to the success of Netflix. Seats for the ruling at the E Barrett Prettyman courthouse in downtown Washington were in such demand that lines began forming outside the courthouse a full day before the scheduled 4pm announcement. AT&T has said it expects to find $1 billion in synergies in the first three years of the deal. "Today's decision will encourage creative new combinations of assets as traditional media companies figure out how to survive the digital transition". The deal was announced in October 2016 and quickly denounced by Trump.

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On November 20, 2017 the Justice Department sued to stop the deal, saying the merger would violate antitrust law because it would harm competition and consumers.

The judge rejected the government's argument that the merger would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies. The approval of AT&T and Time Warner's merger works in Comcast's favor, spurring it to finalize its all-cash offer, which is said to be in the "advanced stages".

During a six-week trial in March and April, the Justice Department argued that the proposed merger needed to be blocked because it would give AT&T too much leverage over competitors in the on-demand and streaming video market.

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