Hollywood Prepares for Merger Mania Following Time Warner, AT&T Approval

Hollywood Prepares for Merger Mania Following Time Warner, AT&T Approval

Law360, Washington (June 12, 2018, 4:44 PM EDT) - AT&T can complete its $85 billion purchase of Time Warner in a major transformation of the pay-TV landscape, a D.C. federal judge ruled Tuesday, rejecting U.S. Department of Justice efforts to block the merger. That could lead to less competition and higher prices for consumers. But Leon declined to put any conditions on the deal.

It's been years in the making, but the mammoth merger of AT&T and Time Warner officially going to happen.

The lawsuit against AT&T had cast a pall over that activity, as a sign that the Department of Justice, under new Trump appointees, was taking a more hard line stance to mega-deals.

In October 2016, AT&T announced its plan to acquire Time Warner for $85.4 billion, and a total of $108 billion with debt.

With or without Time Warner, AT&T is very focused on its media business. AT&T and Time Warner say that by coming together they can create synergies of data and information that will help them make better content and sell more targeted ads, which they claim could ultimately help lower prices for consumers.

AT&T itself is the largest telecom provider in the world, and via DirecTV, it is also the largest multichannel video programming distributor in the U.S. Time Warner, meanwhile, owns channels like TBS and TNT, HBO and Warner Bros., not to mention the assets to live sports and news orgs such as the NBA, MLB, NCAA March Madness and PGA.

After a six-weeks-long trial, Federal Judge Richard J. Leon issued his final ruling today that AT&T can proceed with its merger with Time Warner, via The New York Times.

AT&T Inc won approval from a USA court on Tuesday to buy Time Warner Inc for $85 billion, without conditions, allowing AT&T to compete with internet companies that dominate digital advertising and providing new sources of revenue.

The merger is a direct response to the success of "alternative" media services like Netflix and Amazon. The merged company, executives said, would be better able to compete in an era in which people spend more time watching video on phones and tablets and less time on traditional live TV on a big screen.

"This will be a blockbuster summer for media mergers", said Mary Ann Halford, senior adviser to OC&C Strategy Consultants.

"We knew we had to have scale", he said, according to Variety. If Facebook were to buy Netflix, would that a vertical merger between a social media company or a horizontal merger between two digital providers? Trump had pledged to block the deal when he was campaigning for president.

The ruling on the AT&T Time Warner deal will have a major impact not just in shaping the media and telecom industries, but also in influencing merger and acquisition activity among large companies. Post-merger, AT&T rivals like Charter Communications and Cox, which now pay Time Warner for its channels, would suddenly also become AT&T's customers. President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few".