Judge approves AT&T-Time Warner merger

Anna Jefferson
June 13, 2018

Rival cable company Comcast is now likely to go ahead with its planned attempt to woo Twenty-First Century Fox Inc away from Walt Disney Co, which said it would acquire most assets of the media company for around $50 billion past year.

The Times further notes that typically when the Justice Department attempts to use antitrust rules to block a merger, it's because of a large corporation buying out a competitor.

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U.S. District Judge Richard Leon green-lit the merger without adding major conditions to the deal.

The DOJ also faced harsher questioning from the judge, who came off exasperated at times during the government's arguments.

"That's a legal shocker." said J.B. Heaton, an attorney and consultant on litigation and regulatory proceedings.

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The ruling is expected to lead to other mergers and acquisitions.

Judge Leon's decision comes more than 18 months after AT&T announced in 2016 its plans to buy Time Warner in a transaction then valued at about $85bn.

According to Deadline, CEO Brian Roberts told investors during the company's annual shareholders meeting early Monday morning that Comcast is in the "advanced stages" of preparing a bid for 21st Century Fox - an offer dependent on the ruling in the AT&T-Time Warner anti-trust case, which is expected later today.

Walt Disney shares fell 1.7 percent, to $102.57, while Comcast shares plunged 3.9 percent, to $31.12.

The case was closely watched by telecom and media industry analysts, corporate executives, and Wall Street.

"It's open season for vertical mergers", said Chris Sagers, an antitrust law professor at the Cleveland-Marshall College of Law.

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The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically risky as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint.

The Justice Department argued that the merger between AT&T and Time Warner would introduce unfair advantages in the marketplace. At the same time, he also gave the Department of Justice a tonque-lashing for a poorly presented case.

This is the first time the DOJ has lost an antitrust challenge since 2004. Therefore, AT&T would likely increase the rates that other content distributors must pay to air Time Warner content - forcing its rivals to either raise prices on their subscribers (which would inspire some consumers to switch to DirectTV), or else accept lower profit margins (which would impair their ability to compete with AT&T in the long term).

"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".

Many antitrust lawyers predicted that AT&T would prevail. "Today's decision will encourage creative new combinations of assets as traditional media companies figure out how to survive the digital transition".

"It's more that they just didn't lose". Specifically, he said the government did not show how Turner would have any more leverage with carriers as part of AT&T, nor did they show that AT&T would get an unfair advantage over other carriers.

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