On June 12, 2018, U.S District Court Judge Richard Leon ruled against the U.S Department of Justice, approving AT&T’s purchase of Time Warner for $85.4 billion. This ruling is the result of a six-week long trial, the legal battle lasting for over 20 months, on whether this type of merger would result in an illegal monopoly. A merger of this size could have massive implications for the media industry and can pave the way for other potential mergers of this size in the future.

After the ruling, Assistant Attorney General Makan Delrahim said that the Justice Department was disappointed with the decision. He added, “We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger…We will closely review the Court’s opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers.”

AT&T celebrated the ruling and announced that the deal would close by June 20, 2018. By acquiring Time Warner, AT&T will own popular brands such as HBO, CNN and Warner Bros, uniting all of Time Warner’s TV shows and movies with AT&T’s cell phone and satellite network distribution channels. CNN reports how the deal will help Time Warner and AT&T compete in a ‘rapidly changing media landscape’ against giant corporations like Netflix and Amazon, who are investing more in content.

Judge Leon ultimately disregarded all of the Justice’s Departments arguments, approving the deal with no added conditions for AT&T. In his ruling, he wrote, “The Government has failed to meet its burden of proof to show that the merger is likely to result in a substantial lessening of competition.”

A merger of this size is unprecedented in the media industry and could have ramifications for other deals in the very near future. Comcast and Disney are both looking to acquire parts of 21st Century Fox. Disney has already put in a bid, however after the outcome of this court ruling, Comcast is expected to put in their bid within a few days. This merger may also pave the way for other big mergers and acquisitions in other industries as well, like T-Mobile’s plans to acquire Sprint.

Besides the Justice Department, there are many other big players who do not approve of the ruling. President Donald Trump spoke out against the proposal back in 2016, saying how it would lead to “too much concentration of power in the hands of too few.” That being said, NPR reports how the president’s apathy for CNN has left some people questioning if he disapproves of the deal just because of concerns over greater corporation consolidation.

It remains to be seen what the true effects of this ruling will have for the future of media, and for other industries as well.

Stay tuned…

 

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