AT&T Inc. was cleared by a judge to take over Time Warner Inc. in an $85 billion deal that the mobile-phone giant says will fuel its evolution into a media powerhouse that can go head-to-head with Netflix Inc. and Amazon.com Inc.
"This decision from Judge Leon will have broad ramifications for the tech, telecommunications and media sector for decades to come", said Daniel Ives, the chief strategy officer at GBH Insights.
"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", AT&T General Counsel David McAtee said. The favorable decision, in a rebuke of the Justice Department's case opposing the deal, is viewed as a green light for other major M&A moves - and several scenarios are already in play.
The government argued during the trial that if AT&T were to own Time Warner, it could violate antitrust law by using its market power to get higher prices from TV distributors.
"We want people engaged with their mobile devices all day watching movies and video", Stephenson said in April during the trial.
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 companies then entered into discussions with the DOJ previous year and rumors surfaced that the agency had suggested some divestitures in order for AT&T to avoid an antitrust lawsuit.
A combination photo shows the Time Warner shares price at the New York Stock Exchange and AT&T logo in New York, NY, U.S., on November 15, 2017 and on October 23, 2016 respectively.
The industry is now turning its eyes to another potential megamerger - the fight between Comcast and Disney to acquire 21st Century Fox. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20.
Leon said the evidence and testimony provided by the government were faulty and that it never proved the merged entity would have increased leverage over its competitors.
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 past year.
As a candidate for president, Trump vowed to block the merger, stating it would concentrate too much power in one company. In order for them to compete against these giants, Time Warner needs AT&T's distribution network of broadband and wireless customers. Comcast, for instance, owns NBCUniversal, and Verizon owns websites including Yahoo and HuffPost.
The ruling is expected to unleash more deal-making.
Investors are welcoming a federal judge's approval of AT&T's $85 billion takeover of Time Warner. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news". He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.