AT&T wins court approval to buy Time Warner for $85 billion

13 June, 2018, 06:11 | Author: Corey Lynch
  • Courts To M&A Bankers “Everbody Gets Laid!”

A United States federal judge on Tuesday cleared the mega merger between AT&T and Time Warner in an antitrust case with potential far-reaching implications. But Leon blocked discovery on certain White House communications that AT&T and Time Warner were seeking, and the companies dropped that defense, choosing to litigate the case on pure antitrust grounds.

AT&T says it'll complete the purchase of Time Warner on June 20, and seeing as how the wireless carrier first announced these plans on October 22 of 2016, some resolution is well overdue. The favorable decision, in a rebuke of the Justice Department's case opposing the deal, is viewed as a green light for other major M&A moves - and several scenarios are already in play.

At the heart of the DOJ's complaint is an assumption that the merged entity would use its market power to raise the price of content now owned by Time Warner, or threaten to withhold programming, including hit shows such as Game of Thrones and NCAA March Madness. For instance, AT&T could charge other content providers (including Verizon, which owns HuffPost's parent company, Oath) artificially high prices to air the cable channels it acquired through Time Warner.

The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data. AT&T is a service provider buying up a content producer, making a single, stronger company that's better able to compete.

A federal judge ruled today that the AT&T-Time Warner merger can proceed without any concessions.

The AT&T-Time Warner merger is a direct result of media companies like Netflix and Amazon creating and distributing content through alternative means to traditional cable.

Trump's antitrust lawyers and regulators have not pursued a consistent line against increased consolidation; under newly elevated Chairman Ajit Pai, a Republican, the FCC has swept away many regulations limiting how many stations a single company can own.

It's not clear whether the DoJ will appeal today's decision or seek an injunction, but if so, it could tie up the merger in courts for months and complicate the merger's outcome.

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. It chose instead to merge with Time Warner.

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

AT&T and Time Warner dismissed the government's concerns. That same day, Trump, then a candidate for president, pledged that his administration would block the deal.

U.S. District Judge Richard Leon rejected the government's argument that the AT&T-Time Warner combination would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

President Donald Trump also once weighed in on the deal, commenting that an AT&T victory would put too much power "in the hands of too few" ― but many speculated that his aversion to the merger had more to do with his issues with CNN than anything else (Turner Broadcasting is CNN's parent company).


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