The path for blockbuster media deals and others could be transformed in an instant on Tuesday, when a federal judge is expected to issue his opinion on the government’s effort to block AT&T’s merger with Time Warner, reports The NYTimes.
If the merger is blocked, The Times says some executives are likely to slim down their deal aspirations. If the deal ends up going through, expect a cascade of mergers and acquisitions.
The Justice Department suit to stop AT&T from buying Time Warner, an $85.4 billion deal, surprised investors and antitrust experts when it was filed late last year. The two companies are in related industries but do not produce competing products — one makes media content, and the other distributes it. Deals between such companies, called vertical mergers, typically pass regulatory scrutiny with minimal roadblocks.
During a six-week trial at the United States District Court in Washington, the Justice Department argued that the merger would hurt consumers because the combined company could have the power to raise prices and squash upstart rivals. AT&T and Time Warner said the deal was necessary to compete with fast-growing streaming video giants like Netflix and Amazon.
The case will be decided by Richard J. Leon, a plain-spoken judge appointed by President George W. Bush. He is expected to give a shortened version of his opinion in remarks around 4 p.m. on Tuesday. The full opinion, released around the same time, could be more than 200 pages and will be closely read.
Although Judge Leon has given few clues about his thinking, many analysts expect the companies to prevail because of the history of similar cases that were approved. Some have also said the government struggled in the trial to show that the deal would cause substantial harm.
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