AT&T wins court approval for $85bn takeover of Time Warner

This follows yesterday’s US court approval of the merger of AT&T and Time Warner, which was widely expected to lead Comcast to make a new bid for Fox and, in the long-term, set the stage for broader consolidation between ISPs and media companies.

For this reason, the government was hoping that Leon would at least put conditions on the merger, like requiring the telecom to sell off some of Time Warner’s most coveted properties. The Justice Department could decide to appeal the ruling, however.

The $65bn bid, made on Wednesday afternoon, comes in a week of seismic change for the media industry.

AT&T will also add HBO subscribers, Warner Brother’s film studio and Turner channels. That was the basis for the government’s rejection of AT&T’s proposed merger with T-Mobile back in 2011. Now AT&T’s CEO says they only plan to launch the service if they are able to merge with Time Warner. The government had opposed the deal, claiming that it would limit competition and raise costs for consumers.

In this October 24, 2016, file photo, clouds are reflected in the glass facade of the Time Warner building in NY.

AT&T in a six-week trial argued that the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook Inc and Alphabet Inc’s Google already do. Leon rejected the government’s position, which could lead to a flurry of entertainment mergers. “This decision was a sound and proper rejection of all of the government’s arguments to stop this merger”.

The companies have until June 21 to close the merger, per their previously set deadline.

The ruling is a stinging defeat for the Justice Department. That same day, Trump, then a candidate for president, pledged that his administration would block the deal. It claims about 25 million of the 90 million or so USA households that are pay-TV customers. Online companies like Amazon, Google and Netflix have emerged as alternatives to the cable industry both distributing and creating their own content.

Comcast Corp. (CMCSA.O) made a long-awaited offer to acquire much of 21st Century Fox Inc. Netflix has also spent billions in recent years developing original content such as “BoJack Horseman”, “Orange is the New Black” and “Arrested Development”.

The two then had a long lunch in the Time Warner dining room in NY and agreed that their industries were under siege.

AT&T and Time Warner dismissed the government’s concerns. In theory, AT&T could refuse to enter content deals with DirecTV’s competitors or jack up prices to the point where smaller services would be shut out of the market.

A US District Court judge has given the all-clear for AT&T’s $85bn acquisition of broadcast giant Time Warner.

In the past, the federal antitrust attorneys didn’t seem to be bothered if auto manufacturers owned the companies that stamped out fenders or auto bodies. In fact, he suggested, consumers could end up paying less after a merger – maybe even $500 million less annually.

Many antitrust lawyers predicted that AT&T would prevail.

The decision by Judge Richard Leon is a setback for Makan Delrahim, President Trump appointee to the top spot in the Justice Department’s antitrust division, challenging his view of antitrust laws in the digital era.