AT&T wins court approval to buy Time Warner over Trump opposition

AT&T wins court approval to buy Time Warner over Trump opposition

A federal judge approved the $85 billion mega-merger of AT&T and Time Warner on Tuesday, a move that could usher in a wave of media consolidation while shaping how much consumers pay for streaming TV and movies.

"This decision from Judge Leon will have broad ramifications for the tech, telecommunications and media sector for decades to come", Daniel Ives, the chief strategy officer at GBH Insights, told Business Insider in an email before the decision was handed down.

The AT&T-Time Warner antitrust trial finally has a ruling after the trial ended last month.

"We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government's lawsuit to block our merger with Time Warner", said David McAtee, AT&T General Counsel. "I think you'll see a lot of people using it as an opportunity to push mergers they may have been thinking about", said Ed Black, president of the Computers and Communications Industry Association, a trade group in Washington that represents companies like Amazon, Facebook and Google.

The Justice Department's main argument against the merger was that by owning Time Warner's content, which includes must-have channels like CNN, AT&T could raise prices for pay-TV rivals and keep costs prohibitive for online streaming services.

Today's ruling comes as part of the antitrust lawsuit levied by the Justice Department previous year.

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Prior to the news on the decision in the case, AT&T stock closed up 0.5% (to $34.50 per share) and Time Warner closed up 0.05% in regular trading (to $96.22 per share) which concluded at 4 p.m. ET.

Disney's $52.4 bid for major pieces of 21st Century Fox is pending a vote by Fox shareholders. The "drop dead" deadline for completing the merger is June 21. The government's November lawsuit was also the first major merger challenge under President Donald Trump, who railed against the tie-up when it was announced during the 2016 campaign.

"The government may very well argue that that will increase prices by diminishing choices for consumers", he said. The ruling could open the floodgates to deal-making in the fast-changing entertainment and video-content worlds.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.

Because of AT&T's ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government's lawyers argued during the trial. Comcast, which had earlier bid for the Fox assets but lost out to Disney, is expected to renew its pursuit now that AT&T has won. Comcast, for instance, owns NBCUniversal, and Verizon owns websites including Yahoo and HuffPost. AT&T and Time Warner say that by coming together they can create synergies of data and information that will help them make better content and sell more targeted ads, which they claim could ultimately help lower prices for consumers. 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".

AT&T has demonstrated considerable optimism about the deal in recent weeks.

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