Published: Wed, June 13, 2018
Finance | By Jaime Brady

AT&T granted approval to acquire Time Warner for $85 billion

AT&T granted approval to acquire Time Warner for $85 billion

Outside of media, other acquisition targets also saw their shares get a boost. Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue. Trump had pledged to block the deal when he was campaigning for president.

AT&T announced plans to acquire Time Warner on October 22, 2016. The company could offer to sell off assets that the government says could contribute to anti-competitive practices. The merger unites one of the nation's largest telecom providers with a media giant. In doing so, Leon also removed the last major hurdle for the deal to go through.

Judge Richard Leon of the U.S. District Court of for the District of Columbia issued an opinion Tuesday afternoon that the deal could go through without any conditions, helping to ensure the deal will happen before a deadline set for next week.

AT&T in turn called the government's arguments "absurd" and has argued the deal is necessary for it to compete with tech companies like Netflix, Apple and Amazon as they spend billions to bolster their positions in media.

"That's a legal shocker." said J.B. Heaton, an attorney and consultant on litigation and regulatory proceedings.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent. Disney has bid for 21st Century Fox's entertainment assets, a deal that appears to have been shaped to avoid a challenge by Delrahim's antitrust squad. Comcast and Walt Disney dropped 4.3 percent and 1.8 percent, respectively. AT&T will now have a major foothold in the media industry.

The Justice Department rarely sues to block a "vertical merger" such as the AT&T and Time Warner because they are not considered as economically unsafe as "horizontal mergers" - or ones in which a companies buys direct competitors such as T-Mobile's pending deal for Sprint.

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The Justice Department's antitrust chief Makan Delrahim did not rule out an appeal or a stay. AT&T lawyers initially sought email correspondence between Trump's White House and the Justice Department, but Leon declared that any communications were not relevant to the trial, and AT&T relented.

AT&T Chairman and CEO Randall Stephenson argued the company's proposed $85.4 billion takeover of Time Warner is necessary to compete against companies like Amazon, Facebook, and Google.

For its part, AT&T was cheering the decision.

The DOJ argued that buying Time Warner and its stable of popular TV programming would give AT&T too much control over programming and distribution.

"We are pleased that, after conducting a full and fair trial of the merits, the court has categorically rejected the government's lawsuit to block our merger with Time Warner", AT&T's general counsel David McAtee said in a statement. As reported by CNBC, the global telecommunications conglomerate was willing to offer $60B in cash for the Rupert Murdoch-founded company.

"It's more that they just didn't lose". AT&T CEO Randall Stephenson also said a year ago, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done".

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