Why the AT&T mega-merger is a green light for other businesses

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

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

The Trump administration sued previous year, but after months of discovery and a roughly six-week trial, AT&T will now be able to close the deal ahead of the June 21 deadline, which had a "break up fee" of $500 million. For consumers, that may mean higher prices for services they buy from AT&T and Time Warner now, all in the name of competition.

Among them is T-Mobile US, which is waiting for a government decision on their proposed merger with Sprint Corp.

Executives at both companies broach the idea that the merger was singled out for antitrust enforcement because of President Donald Trump's animosity toward Time Warner unit CNN.

AT&T won approval from a USA court on Tuesday to buy Time Warner for $85 billion, without conditions, allowing AT&T to compete with Internet companies that dominate digital advertising and providing new sources of revenue.

"Consumers should fear a cascade of unchecked mergers and acquisitions to further consolidate the telecom industry resulting in less choice, fewer competitors and higher prices", Senator Richard Blumenthal, a Democrat, said in a statement.

U.S. District Judge Richard Leon announced the decision Tuesday, bringing the biggest antitrust trial in years to an end.

He took issue with the government's analysis that the merger would result in higher prices for consumers, telling a packed courtroom that the findings "rested on improper notions."‬ And Leon also warned the USA government against seeking a stay on the merger if it brings an appeal for the objective of trying to stymie the deal.

Rival cable company Comcast is now likely to go ahead with its planned attempt to woo Fox away from Walt Disney Co, which said it would acquire most assets of the media company for around $50 billion previous year.

The deal could still be imperiled if the Justice Department convinces a circuit court to issue a stay pending appeal.

"All I know is that this will be a blockbuster summer for media mergers".

The Justice Department is not likely to be put off by the loss, said Amy Ray of the law firm Cadwalader, Wickersham & Taft LLP, noting it had prevailed in stopping other mergers between rivals.

Now, the phone and pay-TV giant will be allowed to absorb the owner of CNN, HBO, the Warner Bros. movie studio, "Game of Thrones", coveted sports programming and other "must-see" shows. AT&T did not immediately respond to a request for comment.

The ruling suggests Judge Leon is adapting to the times. He expressed confidence that regulators will see consumer value in the deal and approve the acquisition.

"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", he said in a statement.

The Writers Guild of America West called Leon's decision a "blow to consumers, content creators and competition".

Ryan Radia, a research fellow at the Competitive Enterprise Institute, a right-of-center think tank in Washington, praised the ruling.

The Justice Department, which had sued to block the purchase, has the option of appealing the decision. Pressing in the wings are potential big-billions deals involving 21st Century Fox and Disney, Verizon and CBS, T-Mobile and Sprint.

It also appointed a new chief executive officer earlier this month, Hans Vestberg, the company's chief technology officer, in a move that signaled Verizon would likely double down on its existing telecommunications business. Time Warner said the government's lawsuit was baseless, "political in its motivation", and should have never been brought.

During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.

Company lawyers successfully argued that the merger would allow Time Warner to provide AT&T with innovative video and advertising opportunities, while AT&T would supply Time Warner with customer relationships.

The government argued that AT&T would gain outsize market power, jacking up the prices it charges cable providers to carry networks in the Time Warner stable.