Judge approves AT&T-Time Warner deal

13 June, 2018, 01:14 | Author: Regina Silva
  • Govt argues that AT&T-Time Warner deal would hurt consumers

A U.S. federal judge on Tuesday cleared the mega merger between AT&T and Time Warner in an antitrust case with potential far-reaching implications.

The government argued during the trial that if AT&T were to own Time Warner, it could violate antitrust law by using its market power to get higher prices from TV distributors.

Leon's opinion may also increase the chances that other deals already reached, like CVS' bid for Aetna and T-Mobile's proposed merger with Sprint, will survive regulatory scrutiny. The ruling comes one day after the repeal of net neutrality, meaning that AT&T now has more freedom to prioritize the delivery of select content on its network.

As for a potential appeal from the Justice Department, Judge Leon is discouraging such a move and says the agency should "think" first. It could have an impact on future mergers and acquisitions between content providers and creators. Short-term effects are likely to be favorable - things like a new skinny streaming service, or perks like free HBO for AT&T wireless customers - but as Time Warner continues to negotiate rates and packages with cable companies and new streaming services, the effects will become more clear.

Prior to the news on the decision in the case, AT&T stock closed up 0.5% (to $34.50 per share) and Time Warner closed up 0.05% in regular trading (to $96.22 per share) which concluded at 4 p.m. ET. Disney has bid for 21st Century Fox's entertainment assets, a deal that appears to have been shaped to avoid a challenge by Delrahim's antitrust squad.

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Some thought Trump had pressed for the lawsuit because of his animus toward Time Warner's CNN.

Ahead of the court ruling, a top antitrust official at the Justice Department urged investors not to read too much into the decision to sue to stop AT&T from buying Time Warner.

Today's ruling comes as part of the antitrust lawsuit levied by the Justice Department a year ago. Judge Richard Leon rejected arguments by Justice Department lawyers that the combined company would be too large and too powerful and that the $85 billion deal would harm competition and hurt consumers. He said AT&T plans to close the deal on or before June 20. AT&T will now have a major foothold in the media industry.

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". The companies' CEOs, AT&T's Randall Stephenson and Jeffrey Bewkes of Time Warner Inc., testified in support of the deal. President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few".

"We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government's lawsuit to block our merger with Time Warner", said David McAtee, AT&T General Counsel. AT&T wasn't on board, saying, "Divestitures here would destroy the very consumer value this merger is created to unlock".

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