AT&T wins court approval to buy Time Warner for $85 billion

13 June, 2018, 03:32 | Author: Natasha Holloway
  • Courts To M&A Bankers “Everbody Gets Laid!”

He took issue with the government's analysis that the merger would result in higher prices for consumers, telling a packed courtroom that the findings "rested on improper notions". The media world has been holding their breath for weeks, awaiting the final decision from Judge Richard Leon as to whether or not he would allow for the two companies to merge in a deal valued at more than $80 billion.

The decision represents a setback for the Department of Justice, whose antitrust chief Makan Delrahim, had argued strenuously against the merger.

According to a new report out of Washington, The DoJ plans to sue AT&T to block its $85.4 billion acquisition of Time Warner Inc. An appeal could force the date to be moved back again, perhaps with new demands placed on AT&T by impatient Time Warner shareholders.

Judge Richard Leon said the United States government failed to meet the burden of proof that the tie up between the largest U.S. pay TV operator and media entertainment giant Time Warner would harm competition.

But AT&T rejected that idea, stating in a court filing that, "Divestitures here would destroy the very consumer value this merger is created to unlock".

AT&T and Time Warner are not competitors; theirs would be a "vertical integration" of complementary companies: Time Warner makes the TV shows (and movies and news programming and so forth), while AT&T offers the satellite and cable TV services and mobile phone systems on which people consume such content.

AT&T has said it needs to buy Time Warner to compete with the likes of Amazon, Netflix and Google in the shape-shifting streaming-TV environment.

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Media executives increasingly say content creation and distribution must be married to survive against technology companies like Amazon and Netflix.

AT&T claims that with a purchase of Time Warner, they'll be able to compete in the grand scheme of internet and TV into the future.

"We believe AT&T's strategy to segment its video products (away from just the big bundle, and into four different linear/streaming-based tiers) is a very practical one that could open the door to new potential customers", said Deutsche Bank analyst Matthew Niknam in a research note.

Corporate America had closely watched the case and the decision is likely to lead to more mergers.

Announced in October 2016, the deal was quickly denounced by Donald Trump, who as a candidate and later as president has been critical of Time Warner's CNN and its coverage. Between that now-pending battle and the approved merger of AT&T with Time Warner, the media landscape is undergoing a dramatic shift.

Those comments and his repeated criticism of CNN, which is owned by Time Warner's unit Turner Broadcasting, raised speculation that Trump had pushed Delrahim and the Justice Department to block the deal. 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.

"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", AT&T General Counsel David McAtee said.

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