Judge approves AT&T-Time Warner merger opposed by Trump

Ruling Expected Soon In AT&T/Time-Warner Merger Case

A federal judge has approved AT&T's merger with Time Warner, a massive media deal opposed by the government that will shape how much consumers pay for streaming TV and movies.

The case is commonly characterized as the first major "vertical" deal challenged by federal lawyers in court in more than four decades. The Justice Department could decide to appeal the ruling, however.

In denying any attempt by the government to seek a stay of his ruling during appeal, Leon said AT&T and Time Warner "understandably fear the government will now seek to do indirectly what it couldn't accomplish directly".

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. 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.

Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner. The Justice Department in November sued to block the acquisition, saying it would.

Judge Richard Leon of the U.S. District Court for the District of Columbia said at a hearing that he has found, after a six-week trial, that the deal does not violate antitrust law and can proceed.

"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.

Ruling Expected Soon In AT&T/Time-Warner Merger Case

The Justice Department has not brought a suit seeking to stop a vertical merger - whereby companies operating in different spaces combine - since 1979.

It also appointed a new chief executive officer earlier this month, Hans Vestberg, the company's chief technology officer, in a move that signaled Verizon would likely double down on its existing telecommunications business. He said AT&T plans to close the deal on or before June 20.

With control over a significant portion of the content, AT&T is now in a good place to keep prices high among rivals and prevent streaming TV services from offering cut-price cable alternatives.

During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.

On the campaign trail in October 2016, then-candidate Donald Trump spoke in Gettysburg, Pa.

"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.

But AT&T rejected that idea, stating in a court filing that, "Divestitures here would destroy the very consumer value this merger is created to unlock".

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