A federal judge approved AT&T's $85 billion purchase of Time Warner on Tuesday (June 12), handing the telecom giant a massive victory that could clip the ambitions of US regulators seeking to block big corporate tie-ups.
"The impact from this decision will have wide-reaching ramifications across the telecommunications, media, and tech industry for decades to come", said GBH Insights analyst Dan Ives. In addition, T-Mobile and Sprint are direct competitors, so their merger is perhaps more likely to be seen as anti-competitive than a union of AT&T and Time Warner.
Judge Leon's ruling also affected the trading of other companies mulling mergers.
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.
He said during the trial that the merger with Time Warner is a "significant shift in strategy" for AT&T, explaining the company knew that smaller acquisitions for content wouldn't work.
The ruling is a stinging defeat for the Justice Department.
AT&T's wooing of Time Warner has been politically complicated from the outset.
Comcast reportedly is looking to make an offer to purchase 21st Century Fox the day after AT&T's merger comes into play. The proposed merger was so big and consequential that it forced federal antitrust lawyers to reconsider legal doctrine that permitted mergers of companies that don't directly compete.
The Justice Department filed the suit in November alleging that AT&T would be able to hike rates of its premium channel packages and wrangle higher retransmission fees of Time Warner networks such as Cartoon Network, TBS and CNN from competing pay-TV services.
Rival cable company Comcast is now likely to go ahead with its planned attempt to woo Fox away from Walt Disney Co, which said it would acquire most assets of the media company for around $50 billion a year ago.
"The decision will very much send a signal as to what to expect from the DOJ in the future", Napolitano told FOX Business' Maria Bartiromo on "Mornings with Maria". Announced in October 2016, it was seized on by then presidential candidate Donald Trump as the sort pf deal his administration would block. Comcast and Verizon are also jockeying for position in the new landscape.
The acquisition means AT&T will be the nation's top pay-TV distributor.
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. "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". He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.
Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner.