Published: Wed, June 13, 2018
Money | By Hannah Jacobs

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

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

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.

A USA judge has approved AT&T's $85.4 billion acquisition (paywall) of Time Warner, dismissing antitrust fears and clearing the way for further industry consolidation.

"We are gratified that the court's decision to categorically reject the government's bid to block this historic merger", he said.

AT&T would use its leverage over the must-have shows, in particular HBO's Game of Thrones or National Basketball Association games on TNT, to charge Comcast or Verizon more than it would charge itself for distributing Time Warner channels, giving itself a competitive advantage, the government claimed.

A merged AT&T-Time Warner could, in principle, refuse to supply content to some distributors in order to drive consumers to purchase its own access and content bundles, but it would not be in the merged company's financial interest to do so. The ruling arrives after the Justice Department filed a lawsuit in November 2017 to try and stop the deal, which is valued at $85 billion.

Bloomberg via Getty Images AT&T CEO and Chairman Randall Stephenson exits federal court in April.

On Tuesday, Wall Street considered Leon's decision a "canary in the coal mine" - or an indicator for whether Comcast could go ahead with an all-cash hostile bid for parts of 21st Century Fox.

Gary Ginsberg, executive Vice President of Time Warner, said that they were happy with the decision.

The AT&T and Time Warner merger has officially been approved. Quoting Bob Dylan at times and warning that "perfect is the enemy of the good" (in reference to his own ruling) he left no doubt that the government utterly failed to make its case. That is, deals where a company was buying its competitor, known in the legal jargon as a "horizontal merger".

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

Assistant Attorney General for Antitrust Makan Delrahim had previously expressed an openness to the deal. "We will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers".

AT&T argued that the merger will help customers without harming AT&T's business rivals, and that the combined company wouldn't have enough market power to raise antitrust concerns.

In this October 24, 2016, file photo, clouds are reflected in the glass facade of the Time Warner building in NY. It proposed that either AT&T not get Turner in the deal or that it should divest itself of DirecTV prior to acquiring Time Warner. Some suspected, however, that the real motivation behind the DOJ's case may be personal and political agenda of Donald Trump himself: He sees CNN as his political nemesis, and CNN is owned by Time Warner.

The White House did not immediately respond to a request for comment.

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