AT&T Cleared to Buy Time Warner in Blow to Trump Administration
AT&T was cleared by a judge to take over Time Warner in an $85 billion deal that will fuel the mobile-phone giant’s evolution into a media powerhouse and could spark a wave of new mergers, according to Bloomberg.
U.S. District Judge Richard Leon rejected the Justice Department’s request for an order blocking the Time Warner acquisition, saying the government failed to make its case that the combination would lead to higher prices for pay-TV subscribers. The judge put no conditions on the deal.
After nearly two years, AT&T is on the cusp of completing its acquisition of Time Warner. They've struck a deal in a bid to become an entertainment giant that can feed Time Warner programming like HBO and CNN to its 119 million mobile, internet and video customers, and go head-to-head with Netflix and Amazon.
The Justice Department can appeal and could ask an appellate court to stay the ruling, though Leon said he hoped the government would have the "good judgment" not to do so. The Justice Department’s antitrust chief, Makan Delrahim, said he was disappointed and will consider his next steps.
The judge’s decision could open the door to other mergers, including Comcast making a formal bid for the 21st Century Fox, which gained as much as 7.3 percent after the ruling and is also the target of competing interest from Walt Disney. The decision also may make it easier for Verizon to buy a content company and clear the regulatory path for deals Cigna and CVS Health have already announced.
Trump’s criticism prompted speculation that the lawsuit was politically motivated. Still, the Justice Department’s case laid out a traditional antitrust theory: that combining two companies in different parts of a supply chain can give the merged company the ability to harm rivals.
The suit stunned investors and antitrust lawyers because it broke with years of past practice for reviewing such deals, known as vertical mergers. Rather than negotiating an agreement that imposes conditions on how AT&T can conduct business, Delrahim demanded AT&T sell businesses to address threats to competition, which the company refused to do.