Economy

Judge approves $85 billion AT&T-Time Warner deal

Judge approves $85 billion AT&T-Time Warner deal”

Judge Richard Leon of the US District Court for the District of Columbia said at a hearing that he has found, after a six-week trial, that the deal does not violate antitrust law and can proceed. The decision now rests with Judge Leon because the Justice Department sued AT&T to block the merger.

With the megamerger expected to close in a matter of weeks, AT&T will now control DirecTV, the country's largest pay-TV distributor, the second-largest cellular network and Time Warner's popular programming - with CNN, HBO, TBS, TNT and Warner Bros.

In a complete rebuke of the Justice Department's arguments, Leon sided with AT&T and did not approve any conditions. In order for them to compete against these giants, Time Warner needs AT&T's distribution network of broadband and wireless customers.

But AT&T failed to provide any evidence suggesting that the DOJ's prosecution of the merger had "discriminatory effect and discriminatory intent", Leon said in a ruling earlier in the trial.

AT&T argued that the merger will help customers without harming AT&T's business rivals, and that the combined company wouldn't have enough market power to raise antitrust concerns.

The Justice Department had repeatedly suggested the judge consider forcing AT&T to divest some of Time Warner's cable channels. It claims about 25 million of the 90 million or so US households that are pay-TV customers. Comcast is expected to try to buy much of 21st Century Fox, potentially laying the groundwork for a bidding war with Disney. Comcast and Verizon are also jockeying for position in the new landscape.

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

As one carrot to get deal approval, AT&T CEO Randall Stephenson mentioned in court that AT&T will be debuting a new skinny streaming service in the near future.

The proposed acquisition of Time Warner by AT&T was what's known as a "vertical merger", the integration of two companies in different areas of the economy.

The government's case hinged on an economic model produced by Carl Shapiro, an economist at the University of California at Berkeley, who predicted an annual price increase to consumers of at least $285 million.

The companies' main economist, Dennis Carlton from the University of Chicago, refuted Shapiro's model as overly complicated and rejected his conclusions.

"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", McAtee said in a statement. 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.



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