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AT&T can complete its massive merger with Time Warner, judge rules


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 rules AT&T can purchase Time Warner


He reportedly put no conditions on the deal. Last November, the Department of Justice slapped an antitrust lawsuit on AT&T's proposed acquisition of Time Warner and the trial resulting from that lawsuit wrapped up last month. The DOJ has maintained that merging the two companies as is would threaten competition, but AT&T has said the deal won't produce anticompetitive effects and moreover, that the DOJ hasn't effectively demonstrated that it would. Today, US District Judge Richard Leon has issued his ruling on the suit and has declared that AT&T can buy Time Warner. This has been a long-running issue, as AT&T first announced its plans to buy Time Warner for $85.4 billion in 2016. The companies then entered into discussions with the DOJ last year and rumors surfaced that the agency had suggested some divestitures in order for AT&T to avoid an antitrust lawsuit. But those conversations didn't work out in either group's favor and the DOJ went ahead with its suit. At the time, AT&T called the move a "radical and inexplicable departure from decades of antitrust precedent." When the trial ended, Judge Leon suggested the parties consider some remedies both could deal with depending on how he ruled. The DOJ said in its post-trial brief that most if its concerns stem from the combination of Turner -- which owns CNN, TBS and TNT -- with DirecTV and therefore they should be split in one way or another. It proposed that either AT&T not get Turner in the deal or that it should divest itself of DirecTV prior to acquiring Time Warner. AT&T wasn't on board, saying, "Divestitures here would destroy the very consumer value this merger is designed to unlock." AT&T CEO Randall Stephenson also said last year, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done. It's illogical. It's why we did the deal." Judge Leon reportedly put no conditions on the deal and the result of this case stands to have far-reaching effects on the media landscape and other groups considering or seeking vertical mergers. Most immediately, Disney's bid to buy a chunk of 21st Century Fox may be impacted as the ruling could encourage Comcast to put forward a competing bid, as it has already announced it might do. Other deals on the line include the proposed T-Mobile and Sprint merger, CVS' purchase of Aetna and Cigna's acquisition of Express Scripts. JUST IN: Statement from U.S. Assistant Attorney General on AT&T/Time Warner decision. In response to the ruling, US Assistant Attorney General Makan Delrahim said, "We are 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." He added that the DOJ would consider its next steps, which could include an appeal. "We are pleased that, after conducting a full and fair trial of the merits, the court has categorically rejected the government's lawsuit to block our merger with Time Warner," AT&T's general counsel David McAtee said in a statement. The company will now work to complete the merger by June 20th.