Judge approves AT&T-Time Warner merger opposed by Trump

The merger's approval was a stinging defeat for the Justice Department, which could move to appeal Leon's ruling.

The companies have until June 21 to close the merger, per their previously set deadline.

The decision is a huge loss for the Justice Department, which broke from recent tradition by challenging the vertical merger, which involves two companies that don't compete directly with each other.

The ruling is also a major blow to Donald Trump's Justice Department.

Prior to the news on the decision in the case, AT&T stock closed up 0.5% (to $34.50 per share) and Time Warner closed up 0.05% in regular trading (to $96.22 per share) which concluded at 4 p.m. ET. AT&T has been the nation's largest pay-TV company since it acquired DirecTV in 2015, and is one of the largest providers of home and mobile broadband service. It claims about 25 million of the 90 million or so USA households that are pay-TV customers. The ruling comes one day after the repeal of net neutrality, meaning that AT&T now has more freedom to prioritize the delivery of select content on its network. Major cable, satellite and phone companies are bulking up with purchases of entertainment conglomerates to compete against rivals born on the internet, like Amazon and Google.

His position, which the White House said it supported, also drew accolades from left-leaning politicians and antitrust experts. Comcast is also expected to make a bid for 21 Century Fox's television division.

As president, Trump has called the merger "not good for the country" and said he believed it would push pay-TV prices higher.

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

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties.

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 government may very well argue that that will increase prices by diminishing choices for consumers", he said.

The companies' main economist, Dennis Carlton from the University of Chicago, refuted Shapiro's model as overly complicated and rejected his conclusions. In fact, he suggested, consumers could end up paying less after a merger - maybe even $500 million less annually. A loss for AT&T and Time Warner could have signaled a new era of government scrutiny over so-called "vertical mergers" and could have halted attempts by companies like Disney, Fox and Comcast to announce their own megadeals.

Because of AT&T's ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government's lawyers argued during the trial. The $85 billion deal can now proceed. And Leon's decision is likely to trigger a wave of new mergers, as many executives were waiting to for the outcome of AT&T's bid before pushing forward with their desired deals.

  • Eleanor Harrison