U.S. District Court Judge Richard Leon has approved AT&T’s proposed $85 billion purchase of Time Warner, a corporate combination that promises to unleash even more megamergers in the fast-changing media business.
The judge’s 200-page opinion permits the merger to go forward with no conditions. The Trump administration had opposed the merger, which promises to join one of the country’s biggest telecom providers with a media powerhouse that owns TV networks CNN, HBO, TBS and TNT as well as Warner Brothers Entertainment and DC Comics.
The transaction will close on or before June 20, AT&T’s lead lawyer, Daniel Petrocelli, told reporters after the ruling.
Beyond the impact on the two companies, the merger is expected to spur frantic dealmaking in the rapidly consolidating media sector. “There are number of deals in the pipeline that will now proceed with renewed vigor,” said Fiona Schaeffer, an antitrust attorney at Milbank, Tweed, Hadley & McCloy.
Assistant Attorney General Makan Delrahim said outside the courtroom that the the DOJ would review the decision “and see the impact on other mergers.”
DOJ said in a statement that it was “disappointed with the Court’s decision today. We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner. 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.”
“There’s a presumption in these vertical cases, an economic presumption, that they are likely to benefit consumers or at least be competitively neutral. Whether that happens in practice is an open question,” said Schaeffer, the attorney.
Leon, the judge in this case, previously approved Comcast’s acquisition of NBCU in 2011. In that case, he added a list of conditions the new entity was required to follow. Among those, Comcast agreed not to gouge competitors who wanted to carry NBC content and not to create a service entirely made up of Comcast or NBC content.
The Justice Department had pressured Time Warner to sell Turner Broadcasting, which includes the cable news operation CNN, or other segments of the business, which both companies resisted. They’ve now won that bet. Time Warner shares were up nearly 5 percent in after-hours trading.
Other media stocks that saw big price moves after the judge’s ruling was announced included Twenty-First Century Fox, whose shares were up nearly 5 percent on speculation it could be the subject of a bidding war between Disney, which already has a $50 billion deal for Fox on the table, and a media giant like Comcast, which in recent weeks has been hinting of its interest in Fox.
Much smaller potential media targets like CBS (the parent company of CBS News) and Viacom saw shares spike 2.7 percent and 3.3 percent, respectively, on the news.
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