AT&T approval boosts stocks of possible merger targets

Govt argues that AT&T-Time Warner deal would hurt consumers

A U.S. federal judge on Tuesday cleared the mega merger between AT&T and Time Warner in an antitrust case with potential far-reaching implications.

Shares of AT&T fell about 1.3 percent in after-hours trade following the decision, while Time Warner rose more than 5 percent.

The Justice Department had sued to block the merger, in light of the latter potential consequences.

Leon also said it would be harmful for him to put a temporary stay on the merger while the government appeals his decision, if it does so.

"The government here has taken its best shot to oppose this merger", Leon said, speaking to a packed courtroom in an unusual session weeks after the trial ended. "I think you'll see a lot of people using it as an opportunity to push mergers they may have been thinking about", said Ed Black, president of the Computers and Communications Industry Association, a trade group in Washington that represents companies like Amazon, Facebook and Google. It could have an impact on future mergers and acquisitions between content providers and creators.

Today's ruling comes as part of the antitrust lawsuit levied by the Justice Department past year.

As the owner of Time Warner, AT&T would be able to set the price that other cable or satellite companies must pay for a large quantity of TV programming. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20. On that same day, then-candidate Donald Trump pledged that his administration would block the deal, saying "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". AT&T has been the nation's largest pay-TV company since it acquired DirecTV in 2015, and is one of the largest providers of home and mobile broadband service.




In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.

The DOJ has argued that this type of consolidation would give the merged AT&T-Time Warner the ability to raise prices, thwarting the competition's ability to compete by forcing them to raise prices to maintain carriage rights.

The case - one of the most closely watched antitrust trials in decades - is viewed as a bellwether for other deals waiting in the wings.

Aetna, which is about to be acquired by CVS Health in a $68 billion deal, had its shares jump 3.5 percent, to $187.00.

Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner. It may immediately trigger another deal between Comcast and Fox, which already has an agreement to sell its entertainment assets to Walt Disney. The government alleged that by owning Time Warner, AT&T 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.

The mega-merger is a high-stakes bet by AT&T Inc. on the synergy between companies that produce news and entertainment and those that funnel it to consumers - who spend more time watching video on phones and tablets and less time on traditional live TV on a big screen.

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