A US Federal Judge Has Approved The AT&T-Time Warner Merger

Marcus Newton
June 13, 2018

Petrocelli told Judge Leon that their estimates show FAANG is worth $3 trillion collectively, while an AT&T-Time Warner entity post-merger would be worth $300 billion.

The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data. 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.

Using unusually strong language, Leon said it would be "manifestly unjust" for the government to ask him to put his own ruling on hold, because if he were to do so, it could have the effect of killing the deal, which has a deadline for completion of June 21.

Judge Leon rejected the arguments and has not imposed any conditions on the buyout.

Leon said the government's objections "rested on improper notions" and warned against an appeal.

AT&T and Time Warner are not competitors; their proposed merger would be a "vertical integration" of complementary companies. He has also discouraged the government agency from pursuing a stay of his decision if it will pursue an appeal.

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

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. 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.

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A Comcast-Fox deal would be another vertical merger, like the AT&T-Time Warner deal. CNBC reports that Comcast will immediately move forward with its all-cash offer for 21st Century Fox assets if the judge approves the deal.

U.S. District Judge Richard Leon announced in court Tuesday his decision in the biggest antitrust trial in years. Stephenson said Watch would only be possible if the merger went through.

AT&T in a six-week trial argued that the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook Inc and Alphabet Inc's Google already do.

Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner.

After the ruling, Time Warner's stock dropped almost 5 percent in after-market trading.

Because of AT&T's ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government's lawyers argued during the trial.

For starters, expect Comcast to make a bid for Fox's entertainment business as early as Wednesday.

The Justice Department is not likely to be put off by the loss, said Amy Ray of the law firm Cadwalader, Wickersham & Taft LLP, noting it had prevailed in stopping other mergers between rivals.

Other reports by MaliBehiribAe

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