A federal judge has rejected the government’s argument that AT&T’s merger with Time Warner would hurt competition in pay TV, adding hundreds of millions of dollars in costs for consumers to stream TV and movies.
U.S. District Court Judge Richard Leon did not impose conditions on the merger’s approval and he also urged the government not to seek a stay when issuing his decision in a closed-door room with reporters.
An explosion of media mergers is predicted, as the deal moves forward only a day after net neutrality met an end with FCC action coming into effect without congressional action to stop it.
At $85.4 billion, AT&T’s acquisition of Time Warner is the second-biggest showbiz merger of all time.
The approval without any conditions means AT&T’s $85.4 billion purchase of Time Warner is legal, clearing the path for a deal that gives the pay-TV provider ownership of cable channels such as HBO and CNN as well as film studio Warner Bros.
Shares of Time Warner jumped roughly five percent in extended trading, while shares of AT&T dropped as much as two percent in response to the verdict.
“With this deal, AT&T will be carrying $249 billion in debt, making it the most indebted company in the history of the world,”.said Lisa McCormick, a New Jersey consumer advocate.”The company was already ‘Too Big To Fail’ so naturally the reckless courts allow it to get even bigger, opening the door to financial manipulation or other improper acts the damage from which cannot be contained to responsible parties.”
McCormick said the merger is another reason for lawmakers to adopt her proposal for a corporate death penalty, which would allow government regulators to dissolve businesses or break up companies that cause damage to the public.
“We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner,” said AT&T General Counsel David McAtee. “We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”
“We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner. We will closely review the Court’s opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers,” said Assistant Attorney General Makan Delrahim.
Comcast plans to kick off a bidding war on Wednesday with Disney to buy some Twenty-First Century Fox assets, which include cable networks, 39 percent of British satellite TV provider Sky Plc and Indian media conglomerate Star, according to people familiar with the matter. While there’s no guarantee a Comcast-Fox tie-up would pass regulatory approval, Comcast would feel good about its chances.
Sprint and T-Mobile announced plans to merge in April, which U.S. regulators may now allow.
CBS and Viacom stopped negotiating a merger that controlling shareholder National Amusements has been pushing for, but both companies could have some other options, which may involve Verizon, Charter, or a combined Sprint/T-Mobile.
Verizon also has a clear opening to buy a large content company to compete with AT&T.
Verizon could be looking at CBS, Viacom (or a combination of the two), Discovery or something else.
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