It’s a good day to be a major conglomerate looking to get even bigger.
U.S. District Judge Richard Leon on Tuesday handed a major win to AT&T in its bid to acquire Time Warner Inc. and effectively become a media giant by approving the $85 billion deal without conditions.
“Ultimately, I conclude that the government has failed to meet its burden to establish that the proposed ‘transaction is likely to lessen competition substantially,'” Judge Leon wrote, citing another antitrust case.
He went on to reject each of the government’s arguments against the deal, including that a combined company will have unfair leverage over consumers and competitors and quell innovation by online upstarts.
While the ruling is likely to be appealed and could make its way to the U.S. Supreme Court, the path is currently clear for the merger to proceed toward a closing later this month and for other companies to make some moves of their own. Comcast has already made it known that a positive ruling in the case would allow it to make a competing bid for the assets of 21st Century Fox, the movie and TV branch that’s been carved out of Rupert Murdoch’s News Corp. Disney already has proposed a $52 billion takeover, while multiple media reports have Comcast willing to go higher. More vertical mergers in media and other industries will likely follow with a big ruling supporting their completion.
Interest in the ruling was such that the court’s document site, Pacer, crashed not long after the decision was read, preventing immediate access to the written ruling.
The Justice Department in November sued to block the AT&T deal, which was revealed the previous year but has received open disapproval from President Trump, who has taken ownership of the antitrust division and its effort to stymie the merger. The DOJ has said its decision to pursue the case was not directed by the White House.
Notably, Time Warner owns CNN, one of Trump’s most regular “fake news” targets. The company also owns HBO and Warner Bros., along with their affiliated assets and studios and a number of other networks, making it the third largest media empire, behind Comcast and The Walt Disney Co., respectively. This is the DOJ’s first antitrust loss in more than a decade.
While the Justice Department argued that the deal could drive up prices for cable consumers, going after a merger between two large companies that don’t make exactly the same product is break with America’s antitrust pursuits. U.S. antitrust efforts tend to follow a narrow definition of monopoly based not on size and ability to consolidate, but whether one is actually absorbing a direct competitor.
AT&T followed that notion in arguing that its takeover is not one of a company providing mainly phone and Internet services, but one that will give it a competitive edge in a media landscape where streaming services, already vertically integrated, are becoming dominate producers of content. The company also argued that AT&T prices “will actually go down” and the merger will “strengthen rather than harm” competition in the video and TV programming markets.
Judge Leon made particular note of the parties’ diverging takes on the merger, writing: “If ever there was an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one.”
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