AT&T, Time Warner Free To Merge

UPDATE 6/12/18 4:45PM: A federal judge said Tuesday that AT&T's $85.4 billion purchase of Time Warner is legal, clearing the path for a deal that would give the pay-TV provider ownership of cable channels such as HBO and CNN as well as film studio Warner Bros.

The Justice Department sued last year to block the merger, citing concerns that AT&T, owner of satellite television provider DirecTV, could charge rival distributors more for Time Warner content, resulting in higher prices for consumers. But AT&T has countered that the logic doesn't hold up since the point of owning content is to get widespread distribution, which brings in affiliate fees and advertising revenue.

U.S. District Court Judge Richard Leon was expected to issue the decision following a six-week trial.

AT&T, also the No. 2 wireless carrier in the U.S., said it was buying Time Warner in October 2016 to diversify its revenues and also become a media powerhouse that could attract consumers by bundling entertainment with mobile service. CEO Randall Stephenson has said the deal would help AT&T compete against tech giants like Amazon and Netflix, which are investing more in content.

The outcome of the trial could have implications for future deals in the telecom and media industries, as well as vertical mergers, where a company buys its supplier.

Earlier Posting..


Federal judge Richard J. Leon is expected to rule at 4 p.m. on AT&T's merger with Time Warner, parent company of major media entities like CNN, HBO and TBS. "It is one of the most influential antitrust cases in decades, enthralling Hollywood, Silicon Valley and Madison Avenue," writes the New York Times's Cecilia Kang, Brooks Barnes and Michael J. de la Merced.

If the deal is approved, Comcast plans to formalize a bid for most of 21st Century Fox assets, according to CNBC. That will pit Comcast against Disney, which has already offered $52 billion for Fox's film and entertainment assets (which don't include Fox News, Fox Business or sports channels).

Comcast, which owns CNBC parent company NBCUniversal, has already publicly acknowledged its plans to compete with Disney on an acquisition of Fox assets, including Fox's movie studio, the Nat Geo and FX networks, regional sports channels, and stakes in Hulu, Star India and Sky PLC. CNBC reported last month that Comcast was preparing to raise $60 billion in a deal for Fox while simultaneously pursuing a $31 billion offer for the 61 percent of Sky that Fox doesn't already own.

Announcing an offer on Wednesday, rather than Tuesday afternoon, will allow Comcast's lawyers to look through the details of Leon's decision, the people said. Comcast advisors and executives believe Comcast's rival bid for Fox will put pressure on Disney's shares, as Disney may to have raise its outstanding $52 billion all-stock offer. Waiting until Wednesday, if Disney shares fall, could also accentuate the difference in value between Comcast's bid and Disney's offer, one of the people said.