AT&T decision could be green light for media mergers
A federal judge has approved AT&T's merger with Time Warner. He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.
U.S. District Judge Richard Leon announced the decision Tuesday, bringing the biggest antitrust trial in years to an end. The ruling blesses the $85 billion merger, one of the biggest media deals ever. It allows AT&T, a phone and pay-TV giant, to absorb the owner of CNN, HBO, the Warner Bros. movie studio, “Game of Thrones,” coveted sports programming and other “must-see” shows.
The Department of Justice could decide to appeal the verdict. AT&T did not immediately respond to a request for comment.
The mega-merger is a high-stakes bet by AT&T Inc. on the synergy between companies that produce news and entertainment and those that funnel it to consumers — who spend more time watching video on phones and tablets and less time on traditional live TV on a big screen.
Approval of the combination was a stinging defeat for the Justice Department. The proposed merger was so big and consequential that it drew the government's first lawsuit in decades to block a merger of two companies that don't directly compete. 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.”
Dallas-based AT&T's power flows from its position as a wireless, broadband and satellite behemoth that also became the country's biggest pay-TV provider with its purchase of DirecTV. It claims about 25 million of the 90 million or so U.S. households that are pay-TV customers.
In light of the ruling, other companies are likely to rush to consolidate.
Tuesday's ruling signaled that federal regulators will have a hard time stopping companies from getting bigger by gobbling up rivals and the programming they own. Even if a company doesn't need to get bigger right away, it might need to do so to prevent a competitor from overshadowing it.
For starters, expect Comcast to make a bid for Fox's entertainment business as early as Wednesday. Disney has made a $52.4 billion all-stock offer for the bulk of Twenty-First Century Fox, including the studios behind the “Avatar” movies, “The Simpsons” and “Modern Family.” Comcast has promised to top that. AT&T's favorable ruling would seem to clear any regulatory hesitation.