AT&T gets green light to buy Time Warner

WASHINGTON AT&T Inc. was cleared by a judge to take over Time Warner Inc. in an US$85 billion deal that the mobile-phone giant says will fuel its evolution into a media powerhouse that can go head-tohead with Netflix Inc. and Amazon. com Inc.

U.S. District Judge Richard Leon on Tuesday rejected the Justice Department’s request for an order blocking the Time Warner acquisition, saying the government failed to make its case that the combination would lead to higher prices for pay-TV subscribers. The judge put no conditions on the deal.

Time Warner gained as much as 5.8 per cent in after-hours trading, while AT&T fell as much as 3.9 per cent.

After nearly two years, AT&T is on the cusp of completing its acquisition of Time Warner, a deal it struck in a bid to become an entertainment giant that can feed Time Warner programming like HBO and CNN to its 119 million mobile, internet and video customers.

“We think the evidence throughout the trial was quite clear and we’re very pleased that the court saw it the same way,” said Daniel Petrocelli, AT&T’s lawyer. The company said in a statement that it plans to complete the takeover on or before June 20.

The Justice Department has six days to ask the judge to stay his ruling, though Leon said he hoped the government would have the “good judgment, wisdom and the courage” not to do so. He encouraged the government to seek an appeal on the merits if it desired.

The Justice Department’s antitrust chief, Makan Delrahim, said he was disappointed and will consider the government’s next steps.

Leon described part of the government’s case as “gossamer thin.” “I conclude the government has failed to meet its burden of proof.”

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.”

Leon said the government’s theory that the merger would give the combined company too much leverage in programming negotiations was “plagued by inconsistencies” and contradicted by the Justice Department’s own evidence. The judge found similar deficiencies in the government’s other theory of harm to customers: that the deal would stunt development of streaming services and prevent competitors from gaining access to HBO.