After a six-week trial, Judge Richard Leon ruled that the government had failed to prove that the deal violates antitrust law.
Using unusually strong language, he discouraged the Justice Department from asking him to put the ruling on hold while they consider an appeal. He said such a request would be “manifestly unjust” because it would have the effect of killing the acquisition.
AT&T vowed to close the deal by June 20 — creating a powerhouse that will unite Time Warner’s movies and TV shows with AT&T’s enormous distribution system, including cell phone and satellite networks.
The deal was announced in October 2016. The Justice Department sued in November 2017 to stop it, arguing that it would harm competition and raise prices for consumers.
AT&T said it needed Time Warner to survive in a rapidly changing media landscape, especially to compete against the likes of Netflix and Amazon.
The judge had the option of rejecting the deal outright or demanding certain conditions, including that AT&T sell some of Time Warner’s assets. But he signed off on the deal with no conditions.
“The Government has failed to meet its burden of proof to show that the merger is likely to result in a substantial lessening of competition,” he wrote in his ruling.
CNN is owned by Time Warner (TWX).
Makan Delrahim, the Justice Department’s top antitrust official, said the government was disappointed in the ruling and would “consider next steps.”
“We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner,” he said in a statement.
AT&T and Time Warner’s lead lawyer, Daniel Petrocelli, said outside court that the companies were gratified and relieved.
“The case stands as a testament to the wisdom of this combination of these two great companies and how it will benefit consumers for generations to come,” he told reporters.
The judge’s ruling will likely be seen by tech and telecom giants as a green light to pursue a slew of major media acquisitions.
Comcast is widely expected to bid within days for part of 21st Century Fo. (FOX) That would set up a showdown with Disne, (DIS)which has already put in a bid for those assets. Fox stock jumped more than 6% in after-hours trading following the ruling.
“Brian Roberts and Team Comcast are cleared to bid,” BTIG Research analyst Rich Greenfield told CNNMoney after the ruling. “The question is whether Disney is ready.”
A Comcast spokesperson declined to comment.
Some of AT&T’s top executives traveled to Washington for the announcement. AT&T CEO Randall Stephenson remained at company headquarters in Dallas, and he learned of the ruling when AT&T general counsel David McAtee called him, a spokesperson said.
The Time Warner deal is a crucial achievement for Stephenson, who views AT&T as competing with Google, Facebook, Netflix and other Silicon Valley giants.
Outgoing Time Warner CEO Jeff Bewkes also learned the news from a phone call, and he was relieved and very happy about the ruling, a spokesperson said.
AT&T announced plans to acquire Time Warner on October 22, 2016. That same day, Donald Trump, then a candidate for president, pledged that his administration would block the deal.
“As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” he said.
More than a year later, the Trump Justice Department sued to stop the deal.
The government alleged that a combined AT&T-Time Warner would have too much leverage in negotiations with television distributors, which would hurt competitors, harm innovation and could lead to increased cable prices for consumers.
AT&T and Time Warner say the combined company can leverage viewer data to make better content to sell more targeted ads, which they claim could help lower prices for consumers.
During the trial, the judge heard from dozens of witnesses, including Stephenson and Bewkes.
Initially, AT&T and Time Warner planned to use a “selective enforcement” defense, alleging that the administration was blocking the deal because of Trump’s dislike of CNN.
But Leon blocked discovery on certain White House communications that AT&T and Time Warner were seeking, and the companies dropped that defense, choosing to litigate the case on pure antitrust grounds.
