AT&T and Time Warner prevailed in their case against the U.S. Department of Justice on Tuesday, paving the way for a merger between the two companies and signaling a wave of consolidations that could reshape the media and telecom landscape.
U.S. District Court Judge Richard J. Leon ruled against the DOJ’s antitrust suit aimed at blocking the merger, saying the government failed to prove that AT&T’s $85.4-billion acquisition would lead to higher prices for consumers.
Leon did not require any conditions for the merger, giving a clean victory to both companies which had hoped to avoid selling off any assets during AT&T's acquisition. The telecom giant had argued that it needed to purchase Time Warner—which owns companies like CNN, HBO, and Warner Bros.—in order to better compete with technology upstarts like Netflix and Amazon.
In interview with The Daily Beast, Time Warner executive vice president Gary Ginsberg described the judge's ruling as a "resounding" victory for AT&T and Time Warner.
"It was a case that never should have been brought in the first place," said Ginsberg, who added that Time Warner Chairman and CEO Jeffrey Bewkes "is very pleased" by the ruling.
"Anyone who sat through that case would have probably seen the case the way the judge did," Ginsberg said after emerging from the Washington, D.C., federal courtroom, on his way to a celebration at a nearby bistro. "The evidence was so lacking from the government. The decision was entirely appropriate and consistent with what was presented."
Tuesday’s ruling will almost certainly have broad implications across the media landscape as other companies attempt so-called “vertical deals” between companies in related industries that do not directly compete. Comcast is expected to enter into a bidding war with Disney to purchase some of 21st Century Fox’s film and television assets.
The telecom company said in a statement on Tuesday that the company would look to merge with Time Warner on or before June 20.
The DOJ was expected to appeal Leon’s ruling, however, and ask the appeals court for injunctive relief to prevent AT&T and Time Warner from closing the sale pending the final disposition of the case—which, given its antitrust implications, could end up going all the way to the Supreme Court.
In a statement, assistant attorney general Makan Delrahim said the government was not pleased with Tuesday’s decision, and would weigh its options.
“We are disappointed with the Court’s decision today,” Delrahim said. “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.”
If the government decided to appeal, it would be unlikely to stop AT&T’s attempt to complete the merger. It is extremely difficult to obtain injunctive relief in such cases because it would require a judgment that the appealing party is likely to prevail on the merits—a conclusion that would contradict the trial judge’s decision, and would require a determination that Judge Leon somehow erred on the law.
And according to CNN, the judge "strongly discouraged" the government from putting a hold on the ruling.
Referring to Leon's stern lecture to DOJ lawyers to think twice before seeking injunctive relief to delay the sale, Ginsberg said, "Hopefully they will listen to it."