Fate of massive AT&T-Time Warner merger in United States judge's hands

Courts To M&A Bankers “Everbody Gets Laid!”

AT&T Inc. was cleared by a judge to take over Time Warner Inc.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. Amazon and Apple, which both have market caps bigger than every major media company combined, pose a similar problem. Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue. The government's November lawsuit was also the first major merger challenge under President Donald Trump, who railed against the tie-up when it was announced during the 2016 campaign.

But Delrahim swore to the court that he was not influenced by the White House, and Leon stopped most of the arguments about political interference from entering the trial.

Indeed, it's expected that AT&T rival Comcast Corp. will now enter a bidding war with the Walt Disney Co., which has offered the movie and TV production assets of 21st Century Fox for $52 billion. Now that you know the merger can go ahead, what kind of effect is it likely to have on media companies, telecom companies, other potential deals in the space? It would also be the 12th largest deal in any sector, the data showed.

He took issue with the government's analysis that the merger would result in higher prices for consumers, telling a packed courtroom that the findings "rested on improper notions."‬ And Leon also warned the US government against seeking a stay on the merger if it brings an appeal for the goal of trying to stymie the deal.

"That's a legal shocker", said J.B. Heaton, an attorney and consultant on litigation and regulatory proceedings. It is described as a "vertical merger", or a deal between companies that don't directly compete but operate in the same supply chain. A looming example is the pending merger of Sprint and T-Mobile, a $26 billion combination of the country's third and fourth-largest wireless companies. Comcast shares fell 3.3 percent, though.

Opponents of the AT&T decision also predicted more deals.

Leon said the government failed to prove that the merger would lead to higher prices and other ham to consumers.

United States government regulators tried to block the US$85 billion (NZ$120bn) deal, arguing the merger would reduce competition in pay TV and lead to higher prices for consumers.

Delrahim said the government was disappointed in the ruling and would "consider next steps".

"This decision could make it extremely hard for the antitrust agencies to fulfill their congressionally mandated duty to promote competition and prevent mergers that may substantially lessen competition", Mr. Nadler said.

"Put me on the side of the fence of thinking that AAG (Makan) Delrahim is interested in challenging the next problematic vertical transaction", she said.

Rep. Jerrold Nadler of NY, the ranking Democrat on the House Judiciary Committee, said he worries that the ruling will drastically alter the telecommunications industry. Post-merger, AT&T rivals like Charter Communications and Cox, which now pay Time Warner for its channels, would suddenly also become AT&T's customers. The deal will unite Time Warner's TV shows and movies with AT&T's enormous distribution system, including cell phone and satellite networks.

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.

That leverage would allow AT&T to raise prices for Time Warner content, with those costs being passed on to consumers, according to the Justice Department.

Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge Leon of the US District Court for the District of Columbia rejected their bid to force the disclosure of White House communications that might have shed light on the matter.

The deal cost AT&T's top lobbyist, Bob Quinn, his job in May after it became public that AT&T had paid Trump's personal lawyer Michael Cohen $600,000 for advice on winning approval.

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