Merger OKd for AT&T and Time Warner
WASHINGTON — A federal judge on Tuesday approved the blockbuster merger between AT&T and Time Warner, rebuffing the government’s effort to block the $85.4 billion deal, in a decision that is expected to unleash a wave of takeovers in corporate America.
The judge, Richard Leon of the U.S. District Court in Washington, said the Justice Department had not proved that the telecommunications company’s acquisition of Time Warner would lead to fewer choices for consumers and higher prices for television and internet services.
The merger would create a media and telecommunications powerhouse, reshaping the landscape of those industries. The combined company would have a library that includes HBO’s hit “Game of Thrones” and channels
like CNN, along with vast distribution reach through wireless and satellite television services across the country.
Media executives say that content creation and distribution must be married to survive against technology companies like Amazon and Netflix. Those companies started making their own programming in just the past several years, but they now spend billions of dollars a year on it, and users can stream their video on apps in homes and on mobile devices, pulling attention from traditional media businesses.
Executives and investors had watched the six-week trial closely, looking for signs about how it might alter their ambitions. Comcast, for example, would like to outbid Walt Disney Co. for some of 21st Century Fox’s assets, but has held off until the trial ended.
David McAtee, AT&T’s general counsel, said the company is pleased with the opinion and looks forward to giving people “video entertainment that is more affordable, mobile and innovative.”
The ruling is a major setback for the Justice Department and its antitrust chief, Makan Delrahim, whose decision to sue to block the deal broke with convention. Deals such as this one, in which the two companies are in related industries but do not produce competing products, are usually approved by federal regulators.
Delrahim had wanted the two companies to sell some major parts before getting government approval, a demand that the executives rejected. That led to the Justice Department’s lawsuit, filed in November.
Delrahim appeared somber after the decision. He said he was disappointed and would review the 170-page opinion before deciding whether the government would ask a higher court to issue a stay of the ruling.
“I’ve taken an oath to uphold competition,” Delrahim said. “We are going to take the next steps as necessary.”
Leon took the unusual step of warning the government not to try to seek an emergency stay of his opinion, saying it would hurt the defendants, which had already endured an 18month regulatory and legal battle for their review. The companies face a June 21 deadline to close their deal.
The deal was hatched in August 2016 when AT&T CEO Randall Stephenson called Jeff Bewkes, his counterpart at Time Warner. Bewkes’ company, with its popular HBO shows, live NBA and NCAA sports broadcasting rights, and CNN, has been a takeover target for years.
The two then had a long lunch in the Time Warner dining room in New York and agreed that their industries were under siege. The purchase of Time Warner would give AT&T the premium television content it needed to make its bundle of wireless, television and broadband services more attractive to customers.
“We want people engaged with their mobile devices all day watching movies and video,” Stephenson said in April during the trial.
Politics clouded the merger from almost the moment it was announced. President Trump, while still a candidate, said he would block the deal “because it’s too much concentration of power in the hands of too few.”
Those comments and his repeated criticism of CNN, which is owned by Time Warner unit Turner Broadcasting, raised speculation that Trump had pushed Delrahim and the Justice Department to block the deal.
But Delrahim swore to the court that he was not influenced by the White House, and Leon stopped most of the arguments about political interference from entering the trial.
Delrahim had argued that the only way antitrust concerns could be resolved was through the sale of major businesses. Last fall, he presented AT&T and Time Warner with two options: Sell the majority stake in either DirecTV or Turner Broadcasting. The companies rejected both options.
His position, which the White House said it supported, also drew accolades from leftleaning politicians and antitrust experts. They have been calling for the government to break up Silicon Valley giants like Google, Facebook and Amazon and to prevent greater consolidation in health care, media, transportation and agriculture.
In a speech Tuesday morning in Washington, Delrahim reiterated his concern. He said the merger “would unlawfully raise prices for cable-TV subscribers and harm online innovation.”