In what could be one of the most consequential antitrust decisions in recent memory, a judge has ruled that AT&T and Time Warner can merge, despite a lawsuit from the Justice Department arguing that the deal would be anti-competitive. While the Justice Department could still appeal, the decision clears the way for a new telecom behemoth, combining AT&Ts paid-TV subscribers with Time Warners content, which includes HBO, CNN, and Warner Bros. The federal judge ruling on the case did not impose any conditions on the deal as part of the decision, handing AT&T a clear victory in the dispute, while delivering a major blow to the Justice Departments antitrust enforcers and telegraphing a green light to other companies with similar merger plans. The ruling, in fact, may have been more closely watched for its effect on future deals. The battle has been seen as a bellwether for other vertical mergers, where a distributor and content producer are looking to combine forces. Now that the AT&T-Time Warner deal has been given a stamp of approval, its all but certain more deals are on the way. Those agreements were lining up even before todays decision: Comcast reportedly planned to make a formal offer to buy 21st Century Fox the day after the ruling, if the judge in the AT&T case approved, an announcement the public can now watch for. The Walt Disney Company is also in the bidding for the company. The AT&T decision is a culmination of intense legal wrangling since the $85 billion takeover announcement in October 2016, and it follows a six-week trial. Early on, questions were raised about whether President Trump, a vocal critic of CNN, was an unseen force in the Justice Departments decision to intervene. But after a decision preventing the AT&T-Time Warner team from digging into the theory, the trial focused on a more traditional question: would the merger harm competition in the marketplace? The Justice Department argued that the major new entrant would be powerful and ubiquitous enough to dictate unfair terms in the marketplace, and it used expert testimony to highlight potential economic perils. AT&T, for its part, has said the merger is necessary for the company to compete against the major tech industry players and would even result in better terms for consumers. Judge Richard Leon did not make it obvious during the trial how he would rule, and any of a number of scenarios were possible. While he might have approved or blocked the deal outright, he also could have made a conditional decision, requiring AT&T to make some sort of concession as a requirement for the merger. Instead, the judge allowed the decision to move through without conditions. Its unclear whether the Justice Department will appeal the decision. In his encyclopedic, 172-page written opinion, Leon rejected the Justice Departments theories of consumer harm, ruling that the agency failed to meet the legal burden showing competition would be substantially lessened by the merger. We are disappointed with the Courts decision today, Assistant Attorney General Makan Delrahim said in a statement. 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 Courts opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers. We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the governments lawsuit to block our merger with Time Warner, AT&T General Counsel David McAtee said in a statement. We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative. The deadline for the deal is set for later this month, and as part of the judges overwhelming decision against the Justice Department, he wrote that he believed the government would be unlikely to succeed on an appeal, adding that granting a temporary stay of his ruling that scuttled the deal would be unjust.
Judge rejects DOJ case against merger, says AT&T can buy Time Warner. AT&T has won a court ruling allowing it to complete its purchase of Time Warner Inc. The ruling (PDF) by US District Judge Richard Leon went entirely in AT&T's favor. The Department of Justice had sued AT&T to block the merger, but the judge's ruling, pending a possible appeal, would let AT&T complete the purchase without spinning off any subsidiaries. The government can appeal the decision, but Judge Leon reportedly said that he would reject any government motion for a stay that would further delay the deal. The case was held in US District Court for the District of Columbia. The government failed to prove that the merger would substantially lessen competition or that AT&T would use its ownership of premium content to harm rival TV providers, Leon wrote. "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," AT&T General Counsel David McAtee said. AT&T said it intends to close the merger by June 20. It's not yet clear whether the government will appeal. " The Justice Department's antitrust chief, Makan Delrahim, said he was disappointed and will consider the government's next steps," Bloomberg reported. As the owner of Time Warner, AT&T would be able to set the price that other cable or satellite companies must pay for a large quantity of TV programming. The Federal Communications Commission under Chairman Ajit Pai allowed AT&T to skip a lengthy public-interest review. But the Department of Justice sued to block the $108 billion merger in November 2017, saying the deal is likely to raise consumers' TV bills. 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. "AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video-distribution models that provide greater choice for consumers," the DOJ said in its complaint. " The proposed merger would result in fewer innovative offerings and higher bills for American families. " AT&T disputed the government's math and tried to prove that President Trump meddled in the government's merger review. Trump had pledged to block the deal when he was campaigning for president. But AT&T failed to provide any evidence suggesting that the DOJ's prosecution of the merger had "discriminatory effect and discriminatory intent," Leon said in a ruling earlier in the trial. AT&T argued that the merger will help customers without harming AT&T's business rivals and that the combined company wouldn't have enough market power to raise antitrust concerns. Customers will benefit from new bundles and offerings made possible by the merger. The combined company, AT&T argued, will "develop new ad-supported video models that shift more costs to advertisers and off consumers. " Consumer advocacy group Public Knowledge was disappointed by today's ruling. "This is a disappointing result, and we expect the government will appeal," Public Knowledge Senior Counsel John Bergmayer said. "In the meantime, not only may consumers be harmed directly by the anticompetitive harms that this merger will cause, such as higher bills and fewer choices of programming and provider, but also by the many other mergers it will encourage." US Sen. Amy Klobuchar (D-Minn.) urged the DOJ to appeal. She said: Allowing this merger to proceed raises serious concerns for consumers and the future of American media, and also sends a troubling signal to others that its open season for vertical mergers that could allow a company to raise the cost of essential products and services that its rivals need to compete, leading to higher costs for consumers and less innovation... I urge the Justice Department to take swift action to appeal this judgment to ensure that competition and consumers are protected.