Judge approves $85 billion AT&T-Time Warner deal

Alicia Cross
June 13, 2018

The ruling from U.S. District Court Judge Richard Leon approving the AT&T-Time Warner deal, with no conditions attached, has broader implications across the U.S. media sector.

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.

The decision by the Justice Department to sue to block the merger caught AT&T and many others in the media industry by surprise.

Now the judge overseeing the case has ruled that AT&T can merge with Time Warner. AT&T wasn't on board, saying, "Divestitures here would destroy the very consumer value this merger is created to unlock". During the trial, AT&T made several efforts to introduce evidence about political interference into the case but was rebuffed by Judge Leon. Stephenson said Watch would only be possible if the merger went through. The "drop dead" deadline for the merger to be completed is June 21. If it's not wrapped up by then, either company could walk away, and AT&T would have to pay a $500 million breakup fee.

The decision on a so-called "vertical integration" - between two companies who do not make competing products - could have a profound impact on future mergers. It claims about 25 million of the 90 million or so US households that are pay-TV customers.

"I conclude the government has failed to meet its burden of proof", Leon said.

The deal, almost two years in the making, netted a massive and potentially legacy-sealing win for AT&T chief executive Randall Stephenson. Major cable, satellite and phone companies are bulking up with purchases of entertainment conglomerates to compete against rivals born on the internet, like Amazon and Google.

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There was no reason that this should have happened". "You go tariff-free, you go barrier-free, you go subsidy free", he said. He will fly to Singapore to meet with North Korean leader Kim Jong Un , which he described as a "mission of peace".

In light of today's decision, Comcast, which has been eyeing its own content creator takeover of 21st Century Fox, will likely move forward with a bid as early as tomorrow.

As president, Trump has called the merger "not good for the country" and said he believed it would push pay-TV prices higher. Trump had pledged to block the deal when he was campaigning for president. Leon sided with the telecom.

AT&T and Time Warner Inc. announced their proposed merger in October 2016. The company could offer to sell off assets that the government says could contribute to anti-competitive practices. "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". He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

Because of AT&T's ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government's lawyers argued during the trial.

The DOJ argued that buying Time Warner and its stable of popular TV programming would give AT&T too much control over programming and distribution.

Leon said the government's case fell short on all counts and warned against seeking to delay the deal with an appeal saying that would cause irreparable harm to the companies.

Other reports by Free-Prsite

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