AT&T-Time Warner Merger Gets The Green Light From Federal Court

AT&T-Time Warner Merger Gets The Green Light From Federal Court

Federal judge Richard Leon appoved the $85 billion merger in court Wednesday, almost two years after the planned deal was announced.

"The impact from this decision will have wide reaching ramifications across the telecommunications, media, and tech industry for decades to come", said GBH Insights analyst Dan Ives.

A ruling for AT&T and Time Warner would not only give the green light for the merger, but it could unleash a flurry of other deals. In February, Rep. Elijah E. Cummings, the ranking member of the House Committee on Oversight and Government Reform, and Rep. Gerald E. Connolly, the ranking member of the Subcommittee on Government Operations, sent a letter to Attorney General Jeff Sessions asking for documents and emails between the Justice Department and the White House about the decision to sue AT&T and Time Warner.

A federal judge has approved AT&T's merger with Time Warner.

In his decision, Leon weighed in on a case that carried political overtones, scrambled typical ideological alignments and triggered close attention from corporate executives beyond media.

On the other side, AT&T and Time Warner (big as they may be) face steep competition from the FAANG companies (Facebook, Apple, Amazon, Netflix and Google), all of whom have made video a top priority.

"This will be a blockbuster summer for media mergers!" said Mary Ann Halford, senior adviser to OC&C Strategy Consultants.

The lawyer added that the merger would be completed no later than June 20 of this year. Time Warner owns HBO, Warner Bros., and Turner Broadcasting System.

The ruling is a stinging defeat for the Justice Department.

The ruling is expected to unleash more deal-making. Announced in October 2016, the deal was quickly denounced by Donald Trump, who as a candidate and later as president has been critical of Time Warner's CNN and its coverage.

The industry is now turning its eyes to another potential megamerger - the fight between Comcast and Disney to acquire 21st Century Fox. Trump had pledged to block the deal when he was campaigning for president. That power would allow the company to raise prices for pay TV rivals and online streaming services, the government said.

Judge Richard Leon said the U.S. government failed to meet the burden of proof that the tie up between the largest USA pay TV operator and media entertainment giant Time Warner would harm competition. The companies rejected both options.

Initially AT&T and Time Warner planned to use a "selective enforcement" defense, alleging that the administration was blocking the deal because of Trump's dislike of CNN. 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. The government alleged that by owning Time Warner, AT&T would have too much leverage in negotiations with television distributors, which would hurt competitors, harm innovation and could lead to increased cable prices for consumers.

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