Judge approves AT&T’s $85bn Time Warner deal

A US federal judge has approved a takeover of US media company Time Warner by telco AT&T, rejecting an appeal by the Department of Justice against the proposed $85.4bn (€71.29bn) merger, with analysts predicting the ruling will embolden companies that are seeking major acquisitions of its type.

The administration of US President Donald Trump had opposed the deal and the DoJ in November filed the complaint against AT&T, satellite-television provider DirecTV and Time Warner in Federal District Court for the District of Columbia.

At the time, AT&T chief executive Randall Stephenson said that the challenge “defies logic” and is “unprecedented.” AT&T had argued the deal was necessary for it to compete with the rising power of tech companies like Netflix, Apple and Amazon.

For its part, the DoJ had claimed an integrated company would use its size to raise prices and that it would be a cause of concern for a single company to own a major pay-television distributor, AT&T’s DirecTV, as well as Time Warner, which produces content distributed by DirecTV’s rivals.

However, Judge Richard Leon yesterday (Tuesday) brought an end to the six-week trial, issuing a ruling without any conditions. Leon said the DoJ’s objections “rested on improper notions” and warned against an appeal. “I hope the government has the wisdom and courage,” not to seek a stay, he added.

The takeover deal was first outlined in October 2016. In July 2017, it emerged that DirecTV would be operated as a separate unit following the takeover. AT&T was also planning to operate its wireless business separately from Time Warner’s media assets following completion of the deal.

Time Warner has a significant interest in sports broadcasting in the US, with rights to Major League Baseball, the NBA basketball league and the March Madness college sports basketball competition.

Time Warner also operates pay-television channels HBO and CNN, as well as production studio Warner Bros.

Commenting on yesterday’s ruling, David McAtee, AT&T general counsel, said: “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. 

“We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. 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.”