The $85 billion merger between ATT and Time Warner was approved by U.S District Court Judge Richard Leon on Tuesday, a landmark ruling expected to pave the way for other media and telecommunications industry deals — including the T-Mobile-Sprint tie-up.
The Justice Department had sued to block the ATT-Time Warner merger, citing anti-competitive reasons and violation of antitrust laws. But Leon rejected the government’s challenge, allowing the combination of a content giant and the nation’s second-largest wireless carrier that also operates DirecTV satellite services.
The merger brings together ATT’s data and distribution pipeline with Time Warner’s vast content library as the combined company competes with tech giants like Facebook, Amazon, Apple, Netflix, and Google — also known as FAANG. It is described as a “vertical merger,” or a deal between companies that don’t directly compete but operate in the same supply chain. The Justice Department can still appeal Leon’s decision.
“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,” David McAtee, ATT General Counsel, said in a statement. “We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”
Some were surprised that the judge ruled in ATT’s favor without conditions.
A really sweeping and decisive victory here for ATT and a rebuke of the Justice Department. Hard to overstate how taken by surprise many people here are by the judge’s opinion.
— Brian Fung (@b_fung) June 12, 2018
The case served as a litmus test for other media consolidation and has implications for corporations like Comcast, Disney, and 21st Century Fox.
The decision helps T-Mobile, which announced plans to merge with Sprint in April after years of on-again, off-again talks. The two wireless carriers expect the merger to close by the first half of 2019, assuming they get regulatory approval.
The proposed $26.5 billion merger will create a more formidable rival to ATT and Verizon Wireless. The combined company would be valued at $146 billion.
On a conference call with Sprint CEO Marcelo Claure earlier this year, T-Mobile CEO John Legere — who would lead the new company — told reporters and analysts that the deal will create a “pro-consumer, strongly disruptive, revved-up competitor.” He expressed confidence that regulators will see consumer value in the deal and approve the acquisition.
Sprint tried to acquire T-Mobile in 2014, but dropped its bid after regulatory pushback.
ATT made an attempt to buy T-Mobile in 2011, but the transaction also fell apart when the regulators expressed opposition and filed a lawsuit to block the deal.