Judge OKs AT&T merger with Time Warner

Judge OKs AT&T merger with Time Warner

AT&T Inc won court approval on Tuesday to buy Time Warner Inc for $85 billion, rebuffing an attempt by U.S. President Donald Trump's administration to block the deal and likely setting off a wave of corporate mergers.

AT&T is known to most Americans as a cell phone service provider while Time Warner owns giant media brands such as the HBO movie channel, the Warner Brothers movie studio and CNN. The Justice Department's top antitrust official, Makan Delrahim, issued a sworn affidavit during the trial saying the decision to bring the case was not influenced by the White House.

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 US 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.

AT&T and Time Warner reject the government's theory and say they're motivated to sell their content as widely as possible. But, he added, "the government's evidence is too thin a reed for this court to rely on".

Ryan Radia, a research fellow at the Competitive Enterprise Institute, a right-of-center think tank in Washington, praised the ruling.

But Michael Copps, a former member of the Federal Communications Commission and an adviser to the left-leaning political group Common Cause, was dismayed.

The Justice Department has other options, Pitt said. "We've had far too much consolidation causing far too much harm to consumers". "There's no constraints", Copps said. "You always wonder in these cases if there's a winner's curse, given the risk (AT&T) can't get the desired synergies and they're taking on a lot of debt with the merger", he said.

Analysts say the decision will bolster firms such as Comcast - which is considering bidding for 21st Century Fox assets, including its stake in Sky, in a challenge to a deal announced between Fox and Disney a year ago.

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Shares in entertainment companies and potential targets of new deals because of Leon's decision rose sharply - CBS shot up about 5 percent and Fox jumped 7 percent in after-market trading on hopes of a bidding war for it between Comcast and Disney.

The decision could also increase the likelihood that the cellphone network T-Mobile will be granted permission to acquire its rival Sprint for $26 billion, and that the Rhode Island-based drugstore chain CVS Health could win approval to buy Aetna, an insurance company, for $68 billion.

Leon could side with the Justice Department and grant the request for an injunction blocking the merger. The proposed merger was so big and consequential that it drew the government's first lawsuit in decades to block a merger of two companies that don't directly compete. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news". He joined Time Warner in 2010.

There was also concern that the federal lawsuit might be politically motivated.

The US had sued to block the deal, arguing that it would reduce competition in pay TV and lead to higher prices for consumers.

Judge Richard Leon isn't wrong that Silicon Valley giants like Netflix, Apple and Amazon.com pose real threats to media companies.

Opponents of the deal, meanwhile, are pointing to both Leon's decision and yesterday's removal of net neutrality protections as a clear signal that things are going to be getting worse (and more expensive) for consumers. And the outcome of this case may not foretell the future.

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