AT&T had initially sought to argue that the government's opposition was fuelled by political objections from US President Donald Trump, who criticised the takeover during the 2016 election campaign. The company could offer to sell off assets that the government says could contribute to anti-competitive practices. The Trump Justice Department had sued to block the $85 billion merger, arguing that it would hurt competition in cable and satellite TV and jack up costs to consumers for streaming TV and movies.
Judge Richard Leon of the U.S. District Court of for the District of Columbia issued an opinion Tuesday afternoon that the deal could go through without any conditions, helping to ensure the deal will happen before a deadline set for next week. He also warned that the government might try to find a way around the courts to block the deal.
Other companies considering acquisitions have been eyeing the case as a bellwether on whether their mergers would go unchallenged.
The judge said that the Department of Justice did not sufficiently meet its burden of proving that the deal would allow AT&T to harm rival TV providers.
Fox's stock jumped 7% in after-hours trading, and Disney's fell modestly amid predictions that Comcast, emboldened by the AT&T ruling, would make an aggressive bid for most of Fox's assets. Comcast and Walt Disney dropped 4.3 percent and 1.8 percent, respectively. "As we're seeing here, that tends to be a roll of the dice", said Stephenson.
The Justice Department filed a lawsuit to stop the deal in November 2017, saying that AT&T's ownership of both DirecTV and Time Warner would give AT&T unfair leverage against rival cable providers that relied on Time Warner's content, such as CNN and HBO's "Game of Thrones".
The judge presiding over the government's legal effort to block AT&T's purchase of Time Warner will likely deliver his verdict on Tuesday, June 12, 2018.More news: Revealed images of the Pixel 3 XL leave nothing to the imagination
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Democrats on Capitol Hill have raised questions about the Justice Department's motivations and the White House's influence in deciding to take the case to court.
First off, it's worth noting that the overall goal of antitrust regulations is to protect the consumer from unfair business practices that may arise from a consolidation of power within a single company.
"I think you'll see a lot of people using it as an opportunity to push mergers they may have been thinking about", said Ed Black, president of the Computers and Communications Industry Association, a trade group in Washington, DC, that represents companies like Amazon, Facebook and Google.
For its part, AT&T was cheering the decision.
Judge Leon said the USA failed to prove the merger would give Time Warner increased power to negotiate fees for its content. The government failed to prove that the merger would dampen competition and innovation and raise prices for pay TV, said Daniel Petrocelli, the companies' lead attorney in defending the merger.
The ruling could also have implications for CBS Corp's potential tie-up with Viacom Inc, which is already uncertain because of a lawsuit between CBS's controlling shareholder, Shari Redstone, and its board.