Published: Wed, June 13, 2018
Money | By Ethel Goodwin

US Court Gives AT&T Approval to Buy Time Warner for $85 Billion

US Court Gives AT&T Approval to Buy Time Warner for $85 Billion

More importantly, AT&T's victory in this case sets the stage for a new round of telecoms mergers.

The industry is now turning its eyes to another potential megamerger - the fight between Comcast and Disney to acquire 21st Century Fox.

AT&T's politically charged takeover of Time Warner was approved by a U.S. judge on Tuesday in a blow to the Trump administration which had fought hard to have the deal scrapped.

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.

AT&T and Time Warner dismissed the government's concerns. The merger will move forward.

The Times also notes that the companies have a June 21 deadline to merge and that the judge, Richard J. Leon, of the United States District Court in Washington, flat out told the feds not to try to seek an emergency stay of the decision due to the harms on the defendants who have battling for 18 months to get the merger approved.

To AT&T, however, goes the grand prize: a premier piece of the entertainment world.

The merger will consolidate AT&T's telecommunications services with Time Warner's content, which includes some of the biggest names in media like HBO, CNN, and sports broadcasts from the National Basketball Association and NCAA. He called one of the government's positions "gossamer thin" and another "poppycock".

The AT&T-Time Warner merger is in direct response to the success of Netflix.

"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers", the DOJ said in its complaint. The ruling comes one day after the repeal of net neutrality, meaning that AT&T now has more freedom to prioritize the delivery of select content on its network. "I think your pricing is going to go up", he said last November. Now they can do the same on broadband.

In response to the ruling, US Assistant Attorney General Makan Delrahim said, "We are disappointed with the court's decision today".

"This is a disappointing result, and we expect the government will appeal", Public Knowledge Senior Counsel John Bergmayer said. "We will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers".

In this October 24, 2016, file photo, clouds are reflected in the glass facade of the Time Warner building in NY. Delrahim maintained that he had not been instructed by the White House as to how to handle the transaction.

Shares of AT&T spiked immediately after the announcement and are now down about 2% in after-hours trading. He said the company needed to take a giant leap into the content business.

After a ruling, a Time Warner spokesman underscored the idea of political interference, telling CNN: "This was a case that was baseless, political in its motivation and should never have been brought in the first place". "The government could present no credible proof in defense of its theories".

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