AT&T® Wins Lawsuit to Buy Time Warner’s Media Assets

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As expected following the net neutrality deregulation, US District Court Judge, Richard Leon said that the acquisition of Time Warner® by AT&T® is legal. The ruling in favor of AT&T® has cleared the path for the Telco giant to acquire the media assets owned by Time Warner®, which includes Warner Bros., CNN, and HBO.

This decision from the judge comes following a 6-week trial. Last year, the Department of Justice’s antitrust division filed a lawsuit in court to block the vertical merger. In the lawsuit, DOJ cited that if the proposed merger goes through, AT&T®, which owns DIRECTV®, could charge competitor distributors more for Time Warner® content, leading to higher prices for subscribers. AT&T® argued that the logic does not hold up, as the whole point of content ownership is to get more distribution, which brings in advertising revenue and affiliate fees.

When issuing the ruling without imposing any conditions on the approval of the vertical merger between the two companies, the federal judge also said that the government should not look for a stay. David McAtee, AT&T’s General Counsel, said that the company feels happy with the positive ruling.

“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®,” McAtee said on behalf of AT&T®. “We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”

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On the contrary, the Assistant Attorney General at Department of Justice’s Antitrust Division, Makan Delrahim, said that the DOJ was let down by the decision that favored the fastest internet provider. “We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T® and Time Warner®. 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,” Delrahim said.

The result of the ruling could spur several other deals in the media and telecommunications industries, and clear the path for vertical mergers in the future, where one company acquires its supplier. Earlier this year, it was reported that Comcast® has been planning a counterbid for 21st Century Fox’s media assets for strengthening their distributing and production. Now that the AT&T® has got the approval to acquire Time Warner®, Comcast® is expected to announce the counterbid for Rupert Murdoch’s media empire anytime soon.

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