Fed­eral judge ap­proves AT&T-Time Warner merger

South Florida Times - - BUSINESS - By AP Busi­ness Writer

MARCY GOR­DON and MAE AN­DER­SON

WASH­ING­TON (AP) — A fed­eral judge ap­proved the $85 bil­lion mega-merger of AT&T and Time Warner on Tuesday, po­ten­tially ush­er­ing 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 im­pos­ing ma­jor con­di­tions as some ex­perts had ex­pected. 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 pay-TV gi­ant AT&T 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 ap­peal the rul­ing, although it said only that it is con­sid­er­ing its op­tions.

The rul­ing could open the flood­gates to deal mak­ing in the fast-chang­ing worlds of en­ter­tain­ment pro­duc­tion and dis­tri­bu­tion. Ma­jor cable, satel­lite and phone com­pa­nies are bulk­ing up with pur­chases of en­ter­tain­ment con­glom­er­ates to com­pete against ri­vals born on the in­ter­net such as Ama­zon and Google.

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

com­bined AT&T-Time Warner could also get a boost from Monday's of­fi­cial end of net neu­tral­ity —the Obama-era rules that barred broad­band and wire­less com­pa­nies from fa­vor­ing their own ser­vices to the detri­ment of ri­vals like Net­flix. AT&T and Ver­i­zon now can give pri­or­ity on their net­works to their own movies and TV shows, while hurt­ing ri­vals such as Ama­zon,YouTube and fu­ture startups.

"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.

The merger would com­bine a com­pany that pro­duces news and en­ter­tain­ment with one that fun­nels that pro­gram­ming to con­sumers. AT&T cast it as a nec­es­sary step at a time when 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. De­spite Jus­tice Depart­ment lawyers tak­ing their "best shot," he said, their ev­i­dence was "too thin a reed for this court to rely on." Leon added that he wouldn't tem­po­rar­ily block 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 was a sting­ing de­feat for the Jus­tice Depart­ment. Op­pos­ing the merger forced fed­eral an­titrust lawyers to ar­gue against stand­ing le­gal doc­trine that fa­vors merg­ers among com­pa­nies that don't com­pete di­rectly with each other.

An­other wild card: When first an­nounced in Oc­to­ber 2016 , the deal drew fire from then-can­di­date Don­ald Trump, who promised to kill it "be­cause it's too much con­cen­tra­tion of power in the hands of too few." Trump has also pub­licly feuded with Time Warner's CNN, call­ing it "fail­ing" and a pur­veyor of "fake news." The pres­i­dent's state­ments didn't come up dur­ing the trial.

John Bergmayer, se­nior coun­sel at the con­sumer group Pub­lic Knowl­edge, said the de­ci­sion could have long-last­ing neg­a­tive ef­fects thanks to "the many other merg­ers it will en­cour­age." In a state­ment, Bergmayer called for "rein­vig­o­rated reg­u­la­tory over­sight of the video mar­ket­place."

Dal­las-based AT&T is a wire­less, broad­band and satel­lite be­he­moth that 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.

AT&T gen­eral coun­sel David McA­tee said the com­pany plans to close the deal on or be­fore June 20.

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