AT&T-Time Warner Deal Approved By Federal Judge

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Federal judge Richard Leon appoved the $85 billion merger in court Wednesday, almost two years after the planned deal was announced. Comcast was reported to be planning a hostile bid for Twenty-First Century Fox assets if Judge Leon allowed the AT&T Time Warner deal to go through.

The ruling comes in direct opposition to the United States Department of Justice, which sued to block the deal. First floated in October 2016, the deal also brought 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".

The AT&T-Time Warner hookup also conceptually validates Comcast-NBCU, said Elgin Thompson, managing director of Digital Capital Advisors.

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. "I think we'll see now that companies will be much more confident about vertical mergers", he added, referring to acquisitions which tie together different parts of a business, such as production and distribution. He said the merger "would unlawfully raise prices for cable-TV subscribers and harm online innovation". AT&T has been the nation's largest pay-TV company since it acquired DirecTV in 2015, and is one of the largest providers of home and mobile broadband service. Most immediately, Disney's bid to buy a chunk of 21st Century Fox may be impacted as the ruling could encourage Comcast to put forward a competing bid, as it has already announced it might do.

"At that point, T would need TWX's consent to further extend the merger agreement, providing TWX the opportunity to push for a sweetener [or] simply walk and pursue other options, with the positive trial court decision providing an encouraging backdrop for media M&A", Jayant wrote in a research note. AT&T is known to most consumers as a telecom company, offering cable, internet and phone services, but this is just the latest in a line of mergers from such companies trying to break into the media landscape.

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It also appointed a new chief executive officer earlier this month, Hans Vestberg, the company's chief technology officer, in a move that signaled Verizon would likely double down on its existing telecommunications business. With Time Warner's assets at its disposal, AT&T might be able to make that dream a reality.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.

In the past, the federal antitrust attorneys didn't seem to be bothered if auto manufacturers owned the companies that stamped out fenders or auto bodies.

U.S. District Judge Richard J. Leon completely rejected DOJ arguments that the merger would unacceptably drive up consumer pay-TV rates by hundreds of millions of dollars a year.

The Time Warner deal is a crucial achievement for Stephenson, who views AT&T as competing with Google, Facebook, Netflix and other Silicon Valley giants. The 30-day waiting period needed for the deal to close will not begin until all the information has been obtained, and that process can take a while, Cantor said.

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