AT&T can buy Time Warner as judge shuts down Department of Justice

Courts To M&A Bankers “Everbody Gets Laid!”

Courts To M&A Bankers “Everbody Gets Laid!”

After a six-weeks-long trial, Federal Judge Richard J. Leon issued his final ruling today that AT&T can proceed with its merger with Time Warner, via The New York Times. The merger unites one of the nation's largest telecom providers with a media giant.

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.

"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.

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.

Media executives increasingly say that content creation and distribution must be married to survive against rising technology companies like Amazon and Netflix. The DOJ moved to block the merger in March, arguing that the merger would reduce competition and hurt consumer choice.

CNN is owned by Time Warner. But, he added, "the government's evidence is too thin a reed for this court to rely on". Judge Leon asked in response to a statement about the threat of content blackouts.

The companies have until June 21 to close the merger, per their previously set deadline. The Justice Department offered Professor Carl Shapiro of the University of California at Berkeley, whose report formed the backbone of the Justice Department's suit.

Courts To M&A Bankers “Everbody Gets Laid!”

AT&T and Time Warner are not competitors; their proposed merger would be a "vertical integration" of complementary companies. That was the basis for the government's rejection of AT&T's proposed merger with T-Mobile back in 2011. It claims about 25 million of the 90 million or so USA households that are pay-TV customers.

The judge dismissed the government's theory that the combined company would lessen competition by restricting the ability of competing networks to use HBO as a promotional tool.

Get ready for more deal-making. "The immediate fallout of this decision is likely to be an attempt by Comcast to outbid Disney for the media content owned by Fox". Comcast and Verizon are also jockeying for position in the new landscape. Time Warner shares are up about 5% at $100.91. Leon sided with the telecom. On that same day, then-candidate Donald Trump pledged that his administration would block the deal, saying "As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few".

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.

A merged AT&T-Time Warner could, in principle, refuse to supply content to some distributors in order to drive consumers to purchase its own access and content bundles, but it would not be in the merged company's financial interest to do so.

Leon did not have kind words for the government's star witness, University of California at Berkeley Professor Carl Shapiro. The companies rejected both options.

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