Federal judge approves AT&T merger with Time Warner

Federal judge approves AT&T merger with Time Warner

Comcast is expected to try to buy much of 21st Century Fox, potentially laying the groundwork for a bidding war with Disney. The company will now work to complete the merger by June 20th.

After almost two years, AT&T is on the cusp of completing its acquisition of Time Warner, a deal it struck 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. The proposed merger was so big and consequential that it forced federal antitrust lawyers to reconsider legal doctrine that permitted mergers of companies that don't directly compete. The decision now rests with Judge Leon because the Justice Department sued AT&T to block the merger.

"We are disappointed that the court missed an opportunity to rein in the First Amendment-crushing mass media consolidation trend, which puts too much media power in the hands of too few", Manning said in a statement.

Petrocelli told Judge Leon that their estimates show FAANG is worth $3 trillion collectively, while an AT&T-Time Warner entity post-merger would be worth $300 billion.

Leon's ruling could shape the government's future competition policy.

If the deal is approved, it will trigger a bidding war between Comcast and Disney for Fox assets, Napolitano said.

Time Warner owns CNN, HBO, Warner Bros.

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The six-week trial featured a parade of expert witnesses as attorneys for the opposing sides took Leon on a journey through the twisty dynamics of the media and entertainment landscape.

In making its case, the US government argued that the merger of AT&T could harm consumers in a number of ways.

The AT&T- Time Warner merger ruling could set the precedent for other media deals in the works, Judge Andrew Napolitano said on Monday. It could tie products together, offering AT&T phone customers free access to Time Warner offerings, squeezing out competitors that do not own media companies. The government's star witness was Carl Shapiro, an economist at the University of California, who used an economic model to predict that consumer cable bills could rise by $500 million annually in aggregate by 2021.

The judge's approval, and scathing opinion that urged the government not to oppose the ruling, will give telecommunications providers the confidence that similar types of acquisitions will also have a shot at clearing regulatory hurdles, and could spur other copycat mergers this year, industry analysts and dealmakers said.

The companies' main economist, Dennis Carlton from the University of Chicago, refuted Shapiro's model as overly complicated and rejected his conclusions.

And the AT&T-Time Warner deal is not necessarily yet in the clear.

"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers", the DOJ said in its complaint.

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