AT&T-Time Warner Judge Fires Starting Gun in the Battle Against Tech

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USA government regulators tried to block the US$85 billion (NZ$120bn) deal, arguing the merger would reduce competition in pay TV and lead to higher prices for consumers.

The fate of the AT&T-Time Warner merger, a massive media deal opposed by the government that could shape how much consumers pay for streaming TV and movies, rests in the hands of a federal judge.

Shares of other media and telecom companies also rose, including T-Mobile US Inc, Sprint Corp, CBS Corp, Dish Network Corp, Discovery Inc and Viacom Inc.

However, in Verizon's most recent quarterly earnings call, executives said they would rather sit out the current consolidation, and instead build out its content offerings through partnerships with independent media companies. Time Warner, after all, was one-half of one of the worst mergers in history when combined with AOL at the top of the tech bubble.

A US court ruled that AT&T's deal for media giant Time Warner could go ahead over the objections of the US Department of Justice, which anxious that the combination would raise prices for consumers. For years, these so-called vertical deals have typically received light treatment from antitrust enforcers, unlike the horizontal mergers that bring together direct competitors.

Gary Ginsberg, 's executive vice president, said in a statement that U.S. District Judge Richard Leon's "resounding rejection of the government's arguments is confirmation that this was a case that was baseless, political in its motivation and should never have been brought in the first place". Major cable, satellite and phone companies are bulking up with purchases of entertainment conglomerates to compete against rivals born on the internet, like Amazon and Google.

U.S. District Court Judge Richard J. Leon expressed surprisingly similar opinions, noting from the bench, "the cost to the defendants and the government has been staggering" and strongly warning DOJ lawyers to not ask for a hold on the merger from him if they planned an appeal, according to CNN reporter Hadas Gold.

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Some were surprised that the judge ruled in AT&T's favor without conditions. The ruling blesses the $85 billion merger, one of the biggest media deals ever.

"This decision will have an outsized effect because there are so few antitrust trials that challenge vertical mergers", said Michael Carrier, a Rutgers University law professor specializing in antitrust.

The White House did not immediately respond to a request for comment.

"Common sense tells you that this degree of concentrated power isn't right", wrote Zephyr Teachout, a candidate for attorney general of NY, wrote immediately following the judge's ruling.

"If what you see is a pattern where friends of the president get their deals approved and his enemies are challenged, it's problematic", Levin said.

"We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government's lawsuit to block our merger with Time Warner", said David McAtee, AT&T General Counsel.

Or Leon could reject the merger outright, accepting the government's contention that it would hurt pay-TV consumers and competition in the industry.

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Approval of the combination would be a stinging defeat for the Justice Department, which could move to appeal Leon's ruling.

Wayne Crews of the Competitive Enterprise Institute said the government's case ignores the technology which is rapidly changing the media sector. Comcast and Verizon are also jockeying for position in the new landscape.

Time Warner's stock rose almost 5 percent in after-market trading.

Company lawyers successfully argued that the merger would allow Time Warner to provide AT&T with innovative video and advertising opportunities, while AT&T would supply Time Warner with customer relationships.

During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.

The government argued that AT&T would gain outsize market power, jacking up the prices it charges cable providers to carry networks in the Time Warner stable.

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