A federal judge on Tuesday approved the blockbuster merger between AT&T and Time Warner, rebuffing the government's effort to block the $85.4 billion (U.S.) deal, in a decision that is expected to unleash a wave of takeovers in corporate America.
"The impact from this decision will have wide-reaching ramifications across the telecommunications, media, and tech industry for decades to come", said GBH Insights analyst Dan Ives. 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.
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.
For this reason, the government was hoping that Leon would at least put conditions on the merger, like requiring the telecom to sell off some of Time Warner's most coveted properties.
Leon said the government's theory that the merger would give the combined company too much leverage in programming negotiations was "plagued by inconsistencies" and contradicted by the Justice Department's own evidence.
Leon said the government failed to prove that the merger would lead to higher prices and other ham to consumers.
Leon rejected the notion of temporarily suspending the merger for a possible appeal by the government.
The Justice Department argued that the merger between AT&T and Time Warner would introduce unfair advantages in the marketplace. The "drop dead" deadline for the merger to be completed is June 21.
Twenty-First Century Fox, which has garnered interest from Disney and Comcast, saw its shares climb 4.6 percent, to $42.25, in after-hours trading.
As a candidate for president, Trump vowed to block the merger, stating it would concentrate too much power in one company. Disney has bid for 21st Century Fox's entertainment assets, a deal that appears to have been shaped to avoid a challenge by Delrahim's antitrust squad. It's unusual for the Justice Department to argue that a vertical merger of two companies that aren't direct competitors would limit competition, but the effect that the merger will have on the telecoms and entertainment industry is significant. Comcast and Verizon are also jockeying for position in the new landscape.
When the trial ended, Judge Leon suggested the parties consider some remedies both could deal with depending on how he ruled.
The deal cost AT&T's top lobbyist, Bob Quinn, his job in May after it became public that AT&T had paid Trump's personal lawyer Michael Cohen $600,000 for advice on winning approval.
"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers", the DOJ said in its complaint.
Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner.