Published: Wed, June 13, 2018
Finance | By Loren Pratt

AT&T approval boosts stocks of possible merger targets

AT&T approval boosts stocks of possible merger targets

The trial was closely watched as the fate of the deal could have had ripple effects on future deals and everyone from media giants to streaming service providers. Therefore, AT&T would likely increase the rates that other content distributors must pay to air Time Warner content - forcing its rivals to either raise prices on their subscribers (which would inspire some consumers to switch to DirectTV), or else accept lower profit margins (which would impair their ability to compete with AT&T in the long term). However, AT&T has argued that making such a deal would be necessary to compete against other tech companies.

In a complete rebuke of the Justice Department's arguments, Leon sided with AT&T and did not approve any conditions.

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 U.S. 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. "We continue to believe the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner". Instead, they argued the media industry is going through a massive change as fewer people subscribe to paid TV service and instead stream content via the internet. He also warned the USA government against bringing an appeal if the objective was to try to stymie the deal, though the DOJ has not indicated its next steps.

Fox News senior judicial analyst Judge Andrew Napolitano on the Department of Justice lawsuit to block AT&T's acquisition of Time Warner and the Comcast-Disney battle for 21st Century Fox' entertainment assets. "For AT&T and Time Warner, this is a major victory lap".

Even so, the case brought past year by the antitrust lawyers at Trump's Justice Department to block the AT&T and Time Warner marriage is an outlier.

Those comments and his repeated criticism of CNN, which is owned by Time Warner's unit Turner Broadcasting, raised speculation that Trump had pushed Delrahim and the Justice Department to block the deal.

Still, at least one company, Comcast, the largest USA cable provider, had been waiting for the court decision before making any large M&A moves in media, sources have said.

For starters, expect Comcast to make a bid for Fox's entertainment business as early as Wednesday.

Leon said the government failed to prove that the merger would lead to higher prices and other ham to consumers. AT&T's chief executive officer, Randall Stephenson, said the hiring had been "a big mistake".

AT&T said it intends to close the merger by June 20.

AT&T said that controlling Time Warner's cable brands will help it craft new types of content to retain its customers as web-based rivals like Netflix Inc woo audiences away from traditional pay-TV subscriptions. "I urge the Justice Department to take swift action to appeal this judgment to ensure that competition and consumers are protected".

Some critics of President Trump have questioned whether the case was brought as political payback against Time Warner's CNN for unfavorable coverage of President Trump, who often called the cable news channel "fake news".

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