Judge clears AT&T purchase of Time Warner
WASHINGTON — A federal judge Tuesday cleared the way for AT&T Inc.’s $85.4 billion purchase of Time Warner Inc., creating an entertainment colossus that promises to reshape the media business.
U.S. District Judge Richard Leon’s ruling in the biggest antitrust case of the century is expected to pave the way for more mega-mergers and was a stinging defeat to the Trump administration.
Before a packed courtroom, Leon made it clear the government had failed to prove any of its arguments against the merger during the six-week trial.
“The parties have waged an epic battle,” Leon said. “The court has spoken.”
AT&T is expected to quickly finalize its deal to buy Time Warner.
“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,” AT&T general counsel David McAtee said in a statement. “We thank the court for its thorough and timely examination of the evidence … and we look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile and innovative.”
The judge strongly urged prosecutors to bypass any appeal, saying it would be an “unjust outcome” after so many delays. After the court hearing, Assistant Atty. Gen. Makan Delrahim said he was “obviously disappointed” by the decision and that he and his team would review the judge’s 170-page decision.
“I’ve taken an oath to uphold competition and we’re going to take a review of the opinion and take the next steps as necessary,” Delrahim said as he left the federal courthouse near Capitol Hill.
Wall Street welcomed the decision, which boosted the shares of other media companies. Time Warner Inc. closed at $96.22 and jumped 5 percent in after-hours trading, although shares in AT&T, which closed at $34.35 Tuesday, dropped 1.5 percent after markets closed.
President Trump had said during the 2016 campaign that the merger would concentrate too much media power in one company, and his long-running feud with Time Warner’s CNN cast a political shadow over the case. The Justice Department filed an antitrust suit late last year to block the deal and Leon denied AT&T’s request to try to uncover any evidence the White House might have influenced the decision.
AT&T, already a telecommunications giant with more than 100 million wireless subscribers and 25 million pay TV homes, will acquire Time Warner’s valuable entertainment assets, including HBO, CNN, Cartoon Network, TBS, TNT, Turner Classic Movies and Warner Bros., Hollywood’s largest TV and movie studio.
During the trial, Justice Department lawyers argued that AT&T wanted to “weaponize” Time Warner’s content to give it leverage to raise customer prices.
The result, the government warned, would be significant harm to competition — particularly new online pay TV providers — and a powerful new gatekeeper company that would lead to an increase of more than $400 million a year in prices for all Americans.
But AT&T and Time Warner Inc.’s legal team, led by highpowered Los Angeles attorney Daniel Petrocelli, pursued an aggressive defense that included testimony from AT&T Chief Executive Randall Stephenson and Time Warner CEO Jeffrey Bewkes.
“We are gratified by the decision .… The case stands as a testament to the wisdom to the combination of these two great companies and how it will benefit consumers for generations to come,” Petrocelli said. “We’re disappointed that it took 18 months to get here but are relieved that it’s finally behind us.”
Bewkes and Stephenson had argued the merger was needed so the companies could better battle online competitors such as Netflix, Amazon, Facebook and Google. The combination of Time Warner’s “premium content” with AT&T’s vast subscriber network would allow the new company to engage consumers and target advertising tailored to their habits.
Prices would go down, not up, AT&T said.
The judge’s ruling has been highly anticipated.
In an extraordinary move, Leon did not post his decision online. He delivered it from the bench at 4 p.m. EDT, after U.S. financial markets had closed. Spectators were not allowed to leave the courtroom until Leon finished.
Professional linestanders, who were paid by attorneys, corporate executives and hedge-fund managers to hold a place in the courtroom line, began queuing up outside the courthouse Monday afternoon — nearly 24 hours in advance. About 50 spent the night on the street outside.
In the courtroom, just before the session was set to begin, court deputy John Haley instructed the packed crowd that nobody would be able to leave while the judge was delivering his decision “except maybe on a gurney.”
The case took on political overtones because of Trump’s campaign comments and his continued labeling of CNN as “fake news.”
“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,” Trump told an Oct. 22, 2016, campaign crowd, which responded with applause.
“The parties have waged an epic battle. The court has spoken.”
– U.S. DISTRICT JUDGE RICHARD LEON