Wave of me­dia merg­ers likely

The Middletown Press (Middletown, CT) - - Business -

Brace your­self for a likely new era of me­dia megamerg­ers.

AT&T’s vic­tory over the gov­ern­ment’s at­tempt to block its $85 bil­lion takeover of Time Warner un­der­scores just how much the way peo­ple watch — and pay for — TV has changed. It also high­lights how cor­po­rate Amer­ica wants to adapt to deal with its new en­vi­ron­ment. In short: Big­ger is bet­ter.

The gov­ern­ment ar­gued that the merger would sti­fle com­pe­ti­tion and lead to higher ca­ble bills. But U.S. District Judge Richard Leon ul­ti­mately agreed with AT&T’s as­ser­tion that it had to grow to sur­vive in the era of Google, Ama­zon and Net­flix.

“It re­ally was a stun­ning re­buke of the Depart­ment of Jus­tice,” said me­dia an­a­lyst Craig Mof­fett. “Judge Leon was wholly un­per­suaded by their case.”

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 such as Ama­zon and Google.

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

A com­bined AT&T-Time Warner could also get a boost from the 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. As of this past Mon­day, AT&T and Ver­i­zon can pri­or­i­tize their own movies and TV shows, to the likely dis­ad­van­tage of ri­vals such as Ama­zon, YouTube and fu­ture star­tups.

The judge’s de­ci­sion frees wire­less and pay-TV gi­ant AT&T to ab­sorb Time Warner, which owns CNN, HBO, the Warner Bros. movie stu­dio, “Game of Thrones,” cov­eted sports pro­gram­ming and other “must-see” shows.

The re­sult for con­sumers? More op­tions, es­pe­cially if they’re AT&T cus­tomers al­ready, said GBH In­sights an­a­lyst Dan Ives. He said con­sumers can ex­pect to more things to watch and more stream­ing op­tions, like bun­dled pack­ages with HBO, CNN or sports.

“It’s a ma­jor shot across the bow at other wire­less and ca­ble providers,” Ives said. But he ac­knowl­edged that con­sumers might even­tu­ally end up pay­ing more, too.

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.”

Getty Images

AT&T and Time Warner at­tor­ney Daniel Petro­celli speaks to the press af­ter a court ruled that the $85 bil­lion merger be­tween AT&T and Time Warner could go ahead in Wash­ing­ton, DC.

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