Federal judge approves AT&T-Time Warner merger

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Courts To M&A Bankers “Everbody Gets Laid!”

A U.S. federal judge on Tuesday cleared the mega merger between AT&T and Time Warner in an antitrust case with potential far-reaching implications. That could lead to less competition and higher prices for consumers.

AT&T's politically charged takeover of Time Warner was approved by a United States judge on Tuesday in a blow to the Trump administration which had fought hard to have the deal scrapped.

In making that ruling, Leon reaffirmed the judiciary's traditional tolerance for "vertical integration" - the technical term for mergers between companies that operate related, but distinct, businesses.

The Times further notes that typically when the Justice Department attempts to use antitrust rules to block a merger, it's because of a large corporation buying out a competitor.

Murdoch rebuffed Comcast's advances past year amid regulatory concerns, but the AT&T/Time Warner deal was so similar to a prospective Comcast/Fox arrangement that conventional wisdom has held that those concerns would evaporate if the AT&T deal went through. The corporate combination promises to unleash even more megamergers in the fast-changing digital media space.

AT&T, a content distributor, first announced a deal in October 2016 that would let it acquire Time Warner, a content creator that counts HBO, Warner Bros. and cable network giant Turner Broadcasting among its biggest assets.

The merger is a direct response to the success of "alternative" media services like Netflix and Amazon. That's not to say that vertical mergers get through regulatory approval free and clear - the FTC has fought 22 vertical mergers since 2000 - but they receive less scrutiny than horizontal mergers.

AT&T has said it needs to buy Time Warner to compete with the likes of Amazon, Netflix and Google in the shape-shifting streaming-TV environment.

The DOJ has argued that this type of consolidation would give the merged AT&T-Time Warner the ability to raise prices, thwarting the competition's ability to compete by forcing them to raise prices to maintain carriage rights. AT&T lawyers initially sought email correspondence between Trump's White House and the Justice Department, but Leon declared that any communications were not relevant to the trial, and AT&T relented.

In April, during the trial, Randall Stephenson - the CEO of AT&T - said, "We want people engaged with their mobile devices all day watching movies and video". President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few".

Now that the merger has been given the go ahead, AT&T will add Time Warner's content to its existing paid TV subscription.

Critics charged that Trump had come out against the deal because of Time Warner's CNN, which has been highly critical of his presidency.

The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically risky as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint.

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