Time Warner Stock Jumps, AT&T Falls After Ruling Clears Path to Merger

  • Time Warner Stock Jumps, AT&T Falls After Ruling Clears Path to Merger

Time Warner Stock Jumps, AT&T Falls After Ruling Clears Path to Merger

The Justice Department claimed that AT&T's acquisition of Time Warner would give the No. 1 pay-TV provider increased bargaining leverage over rivals like Dish Network Corp. that pay for Time Warner programming.

The government can appeal the ruling, but Leon reportedly said that he would reject any government motion for a stay that would further delay the deal.

Leon described part of the government's case as "gossamer thin", saying that during the trial the Justice Department's expert witness declined to back some of the government's own theories.

The case has drawn attention from all sides including Sling TV's President Warren Schlichting, who testified against the merger.

Still, at least one company, Comcast, the largest USA cable provider, had been waiting for the court decision before making any large M&A moves in media, sources have said. "It would be a lose/lose for us, and a win/win for them".

We're still waiting to get a copy of the full ruling, but Bloomberg TV reported that US District Judge Richard Leon ruled entirely in AT&T's favor.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.

But AT&T failed to provide any evidence suggesting that the DOJ's prosecution of the merger had "discriminatory effect and discriminatory intent", Leon said in a ruling earlier in the trial.

The ruling is expected to unleash more deal-making. He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

On the campaign trail Trump argued that a combined AT&T/Time Warner was "too much concentration of power in the hands of too few". It could also threaten to withhold content from Time Warner channels, such as CNN, HBO or TNT, from rival services in order to gain a competitive advantage for AT&T's TV services.

The company plans to close the deal by June 20, according to a statement from AT&T's general counsel David McAtee.

The Justice Department has not brought a suit seeking to stop a vertical merger - whereby companies operating in different spaces combine - since 1979. The companies' CEOs, AT&T's Randall Stephenson and Jeffrey Bewkes of Time Warner Inc., testified in support of the deal.

Time Warner gained as much as 5.8 percent in after-hours trading, while AT&T fell as much as 3.9 percent.

The decision by the Justice Department to sue to block the merger caught AT&T and many others in the media industry by surprise.

Asked about the decision, he said, "Obviously we don't agree".

AT&T, which has invested heavily in a streaming video service called DirecTV Now, is free to bulk up its original programming with Time Warner content. AT&T wasn't on board, saying, "Divestitures here would destroy the very consumer value this merger is created to unlock". Announced in October 2016, it was seized on by then presidential candidate Donald Trump as the sort pf deal his administration would block.