Winners, losers from AT&T verdict

After six months of hearings and millions of dollars in legal fees, the legal battle over AT&T’s bid for Time Warner is over — but the true impact of the decision is just starting to be felt.

Judge Richard Leon of the U.S. District Court for the District of Columbia ruled decisively in favor of AT&T on Tuesday, rejecting the Justice Department’s argument that the deal would hurt consumers.

But as in any fight, there are winners and losers — and not all of them were present in the courtroom. Here is a look at who was affected by the ruling.

The winners:

Time Warner shareholders, obviously. The value of AT&T’s cash-and-stock offer has fallen by about $5 billion since it was first announced in 2016, because of a drop in AT&T’s stock price (more on that below). But the deal going ahead is still a huge win for Time Warner shareholders. Rupert Murdoch (and other Fox shareholders). With the court ruling that a pay-TV provider can legally buy a content producer, an emboldened Comcast on Wednesday unveiled a $65 billion takeover bid for most of 21st Century Fox. The offer is 19 percent higher than what Walt Disney has offered, so Murdoch and his fellow investors will enjoy a bidding war over their holdings. T-Mobile and Sprint. The decisive defeat of the Justice Department’s biggest antitrust case in years could make the government more gunshy about challenging big mergers. That can only make the two wireless service providers feel more confident about their $26.5 billion deal to join forces.

Shari Redstone. She has (twice) unsuccessfully sought to merge CBS and Viacom, the two media companies that her family controls. Her hope is reported to be a future sale of the combined business somewhere down the road. Tuesday’s ruling widens the pool of potential bidders for that speculative company.

M&A bankers and lawyers. As media and telecom companies begin to feel more confident about buying rivals based on Tuesday’s news, the dealmakers who enable acquisitions will enjoy huge paydays. Financial advisory fees for AT&T’s bankers alone were estimated at between $90 million and $120 million, according to the consulting firm Freeman & Co. Fees for Time Warner’s bankers were estimated to be between $110 million and $140 million.

The law. Many experts thought that the Justice Department’s AT&T case departed from how regulators traditionally analyzed the harmful effects of mergers. (Some have speculated that the lawsuit was rooted in political, not legal, reasoning.) The verdict was seen as a victory for the established antitrust law.

The losers:

The Justice Department. The AT&T case was the most significant challenge that the department had made against a merger in a long time. Its failure — Judge Leon brutally undercut the basis of the government’s case in his 172-page opinion — may make the antitrust team more cautious about picking fights in the future.

Disney shareholders. The company now either has to get into a bidding war with Comcast over Fox’s assets or walk away from the table altogether. All signs at the moment point to a fight. Comcast shareholders. Not everyone is happy about the bid for Fox. Brian Roberts, Comcast’s chief executive, thinks of the Fox businesses as must-haves, but his shareholders don’t necessarily agree — and there’s little that they can do to stop him.

Stuck in limbo: AT&T. The company got the deal that it wanted. But its shares fell 6 percent Wednesday. Why? Investors are perhaps fearing that it may be overpaying to enter the media industry, while its core businesses are slowly shrinking. In a research note, analyst Craig Moffett of MoffettNathanson downgraded AT&T’s shares to “sell.” He said that, “Time Warner is but a small bucket with which one might bail out a sinking ship.” Ouch.

Consumers. Will people have to pay higher prices for content? Leon wrote that the government didn’t prove to him that would be the case. The judge argued that by letting AT&T buy Time Warner, customers would get another choice for video in an age where Amazon and Netflix have changed the rules of engagement. But skeptics of media consolidation aren’t so sure. Jonathan Schwantes, senior policy counsel for advocacy group Consumers Union, argued: “There is significant opportunity for AT&T to exploit the value of Time Warner’s content in ways that could hurt both consumers and competition alike.”