Judge approves $85 billion AT&T-Time Warner deal

Whichever wins will be gunning for Netflix so let them take each other down a peg first

When a federal judge rejected the Justice Department's suit against the Time Warner deal, it was seen as an endorsement of so-called vertical mergers - combinations that include both media distribution and the programming itself.

It's not yet known whether the Justice Department will appeal.

AT&T will also add HBO subscribers, Warner Brother's film studio and Turner channels.

AT&T applauded the court's decision.

The merged company, executives said, would be better able to compete at a time when people spend more time watching videos on phones and tablets than on TV. The government had opposed the deal, claiming that it would limit competition and raise costs for consumers. Time Warner's assets will help the telecommunications company keep up. CNBC is reporting that Comcast will try to buy Twenty-First Century Fox if AT&T buys Time Warner. He has indeed ruled in favor of the merger, despite government opposition.

Former Federal Communications Commission staff attorney Blair Levin said a loose interpretation of antitrust law would allow the government to block nearly any deal, and open up the process to political interference. An appeal is possible from either side.

The ruling is a stinging defeat for the Justice Department. Was Disney planning on using Hulu's tech to develop its own streaming service that debuts next year? That same day, Trump, then a candidate for president, pledged that his administration would block the deal. T-Mobile also has a deal to buy Sprint. Those internet players started out as "over the top" video distributors that deliver content to your home TV on broadband pipes provided by ISPs like AT&T and Comcast. It claims about 25 million of the 90 million or so US households that are pay-TV customers.

In a scathing opinion bit.ly/2Jxx6qE, he urged the USA government not to seek a stay of his ruling, saying it would be "manifestly unjust" to do so and not likely to succeed. "It's creating a company that is going to put companies like Google and Netflix in check".


Comcast's offer is months in the making, as the company made an all-stock proposal for Fox in November that was actually more generous than Disney's. Comcast and Verizon are also jockeying for position in the new landscape.

The decision comes despite criticism from Trump, a frequent detractor of Time Warner's CNN and its coverage.

Judge Leon delivered his opinion in a closed courtroom packed with reporters and telecom industry-watchers. But Leon blocked discovery on certain White House communications AT&T and Time Warner sought, and ultimately the companies dropped that defense, choosing to litigate the case on pure anti-trust grounds.

The government argued that AT&T would gain outsize market power, jacking up the prices it charges cable providers to carry networks in the Time Warner stable.

The government's case hinged on an economic model produced by Carl Shapiro, an economist at the University of California at Berkeley, who predicted an annual price increase to consumers of at least $285 million.

The judge found similar deficiencies in the government's other theory of harm to customers: that the deal would stunt development of streaming services.

Many antitrust lawyers predicted that AT&T would prevail.

Makan Delrahim, the Trump appointee and head of the Justice Department's Antitrust Division, made it clear in 2017 that he did not believe that temporary merger conditions that restricted big corporations worked as intended, leading to anti-competitive behavior. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20.

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