Wednesday, August 15, 2018
Business

Court approves AT&T purchase of Time Warner

WASHINGTON — A federal judge has approved AT&T’s merger with Time Warner. He rejected the government’s argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

U.S. District Judge Richard Leon announced the decision Tuesday, bringing the biggest antitrust trial in years to an end. The ruling blesses the $85 billion merger, one of the biggest media deals ever. It allows AT&T, a phone and pay-TV giant, to absorb the owner of CNN, HBO, the Warner Bros. movie studio, "Game of Thrones," coveted sports programming and other "must-see" shows.

The Department of Justice could decide to appeal the verdict. AT&T did not immediately respond to a request for comment.

Now that a federal judge has approved AT&T’s $85 billion takeover of Time Warner, other companies are likely to rush to consolidate.

Tuesday’s ruling signaled that federal regulators will have a hard time stopping companies from getting bigger by gobbling up rivals and the programming they own. Even if a company doesn’t need to get bigger right away, it might need to do so to prevent a competitor from overshadowing it.

For starters, expect Comcast to make a bid for Fox’s entertainment business as early as Wednesday. Disney has made a $52.4 billion all-stock offer for the bulk of Twenty-First Century Fox, including the studios behind the "Avatar" movies, "The Simpsons" and "Modern Family." Comcast has promised to top that. AT&T’s favorable ruling would seem to clear any regulatory hesitation.

AT&T says it will complete its purchase of Time Warner by June 20 now that a federal judge has cleared the deal.

AT&T general counsel David McAtee says the company is "pleased" with the verdict after a "full and fair trial on merits."

Government lawyer Makan Delrahim says the Department of Justice is "disappointed" with the decision. In a statement, he warns that the pay-TV industry will be "less competitive and less innovative" as a result of merger.

The government could appeal. Delrahim says officials will review the decision and "consider next steps in light of our commitment to preserving competition for the benefit of American consumers."

In after-market trading following the ruling, shares of Time Warner rose nearly 5 percent and AT&T shares fell 1.6 percent. Shares of Twenty-First Century Fox rose more than 4 percent, while Disney’s stock dropped slightly more than 1 percent. Disney has a deal to buy the bulk of Fox, but Comcast is now expected to make a counterbid, especially with the favorable ruling for AT&T. Comcast shares fell 3.3 percent, though.

Shares of both T-Mobile and Sprint rose; their proposed combination is pending.

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.

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