Published: Wed, June 13, 2018
Finance | By Gustavo Carr

Judge rules AT&T can purchase Time Warner

Judge rules AT&T can purchase Time Warner

AT&T's $85.4 billion acquisition of media giant Time Warner can proceed, a federal judge said Tuesday. The media world has been holding their breath for weeks, awaiting the final decision from Judge Richard Leon as to whether or not he would allow for the two companies to merge in a deal valued at more than $80 billion. However, AT&T has argued that making such a deal would be necessary to compete against other tech companies.

Months before Trump nominated him to the Justice Department's leading antitrust position in 2017, Delrahim even had expressed an openness to the combination of AT&T and Time Warner, predicting in an interview on Canadian television that it might not trigger any regulatory concerns.

The Justice Department had previously offered to clear the deal if AT&T sold off DirecTV or Turner Broadcasting, which includes CNN and HBO.

AT&T and Time Warner's lead lawyer, Daniel Petrocelli, said outside court that the companies were gratified and relieved. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20.

Levine/NewscomAn ill-advised effort by the Department of Justice to stop AT&T from buying out Time Warner for more than $85 billion was rejected by a federal judge today.

In making its case, the US government argued that the merger of AT&T could harm consumers in a number of ways.

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AT&T would use its leverage over the must-have shows, in particular HBO's Game of Thrones or National Basketball Association games on TNT, to charge Comcast or Verizon more than it would charge itself for distributing Time Warner channels, giving itself a competitive advantage, the government claimed.

On the other side, AT&T and Time Warner (big as they may be) face steep competition from the FAANG companies (Facebook, Apple, Amazon, Netflix and Google), all of whom have made video a top priority.

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.

"We are grateful to the court for seeing it the way we did", Gindseberg said. He said the merger "would unlawfully raise prices for cable-TV subscribers and harm online innovation". T-Mobile's merger with Sprint is next on the block, and regulators will soon have to decide whether or not they'll challenge that deal. For instance, AT&T could charge other content providers (including Verizon, which owns HuffPost's parent company, Oath) artificially high prices to air the cable channels it acquired through Time Warner.

Democrats on Capitol Hill have raised questions about the Justice Department's motivations and the White House's influence in deciding to take the case to court.

The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically unsafe as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint. During the 2016 presidential campaign, Trump had vowed to block the proposed merger, "because it's too much concentration of power in the hands of too few".

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