Judge OKs Time Warner-AT&T merger
Effects of deal will be felt for ‘decades,’ one analyst says
WASHINGTON— Afederal judge approved the $85 billion mega-merger 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 green-lit the merger without adding major conditions to the deal. The Trump 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 payTV giant will be allowed to absorb the owner of CNN, HBO, the Warner Bros. By buying DirecTV, AT&T became the biggest pay-TV provider in the U.S. It claims about 25 million households. movie studio, “Game of Thrones,” coveted sports programming and other popular shows. The Justice Department could decide to appeal the ruling, however.
“The impact from this decision will have widereaching 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 high-stakes 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 harm 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 ended. 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 pay a $500 million breakup fee.
The ruling is a stinging defeat for the Justice De- partment. 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.”
Dallas-based AT&T is a wireless, broadband and satellite behemoth that also became the country’s biggest pay-TV provider with its purchase of DirecTV. It claims about 25 million of the 90 million or so U.S. households that are pay-TV customers.
Leon’s ruling could shape the government’s future competition policy. The ruling could open the floodgates to deal making in the fast- changing entertainment and video-content 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.
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’s star witness in the lawsuit was Carl Shapiro, an economist at the University of California, who used an economic model to predict that consumer cable bills could rise by $500 million annually in aggregate by 2021.
The companies’ main economist, Dennis Carlton from the University of Chicago, rebutted Shapiro’s model as overly complicated and rejected his conclusions.