The Denver Post

Merger, he wrote: Major preview?

Judge’s OK of $85B deal is 1st mega-episode of how media firms may make a killing off consumers

- By Marcy Gordon

WASHINGTON» A federal judge approved the $85 billion megamerger of AT&T and Time Warner on Tuesday, a move that could usher in a wave of media consolidat­ion while shaping how much consumers pay for streaming TV and movies.

U.S. District Judge Richard Leon greenlit the merger without adding major conditions to the deal. The Trump administra­tion’s Justice Department had sued to block the $85 billion merger, arguing that it would hurt competitio­n in cable and satellite TV and jack up costs to consumers for streaming TV and movies.

Now, the phone and pay-TV giant will be allowed to absorb the owner of CNN, HBO, the Warner Bros. movie studio, “Game of Thrones,” coveted sports programmin­g and other “must-see” shows. The Justice Department could decide to appeal the ruling, however.

“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. “For AT&T and Time Warner, this is a major victory lap.”

The mega-merger was a highstakes bet by AT&T Inc. on combining a company that produces news and entertainm­ent with one that funnels it to consumers. The merged company, executives said, would be better able to compete in an era in which people spend more time watching video on phones and tablets and less time on traditiona­l live TV on a big screen.

Leon said the government failed to prove that the merger would lead to higher prices and other ham to consumers.

“The government here has taken its best shot to oppose this merger,” Leon said, speaking to a packed courtroom in an unusual session weeks after the trial end-

ed. But, he added, “the government’s evidence is too thin a reed for this court to rely on.”

Leon rejected the notion of temporaril­y suspending the merger for a possible appeal by the government. The “drop dead” deadline for completing the merger is June 21. If it’s not wrapped up by then, either company could walk away, and AT&T would have to pay a $500 million breakup fee.

The ruling is a stinging defeat for the Justice Department. The proposed merger was so big and consequent­ial that it forced federal antitrust lawyers to reconsider legal doctrine that permitted mergers of companies that don’t directly compete. First floated in October 2016, the deal also brought fire from thencandid­ate Donald Trump, who promised to kill it “because it’s too much concentrat­ion of power in the hands of too few.”

Dallasbase­d AT&T is a wireless, broadband and satellite behemoth that also became the country’s biggest payTV provider with its purchase of DirecTV. It claims about 25 million of the 90 million or so U.S. households that are payTV customers.

Leon’s ruling could shape the government’s future competitio­n policy. The ruling could open the floodgates to deal making in the fastchangi­ng entertainm­ent and videoconte­nt worlds. Major cable, satellite and phone companies are bulking up with purchases of entertainm­ent conglomera­tes to compete against rivals born on the internet, like Amazon and Google.

Waiting in the wings are potential bigbillion­s deals involving 21st Century Fox and Disney, Verizon and CBS, TMobile and Sprint. Comcast and Verizon are also jockeying for position in the new landscape.

As president, Trump has called the merger “not good for the country” and said he believed it would push payTV prices higher. Looming in the background of the deal has been Trump’s longrunnin­g feud with Time Warner’s CNN, which he has often derided as “failing” and a purveyor of “fake news.”

The government argued that AT&T would gain outsize market power, jacking up the prices it charges cable providers to carry networks in the Time Warner stable.

Newspapers in English

Newspapers from United States