Published: Wed, June 13, 2018
Money | By Bruce West

Comcast Set to Move Ahead With Fox Bid Following AT&T/Time Warner Decision

Comcast Set to Move Ahead With Fox Bid Following AT&T/Time Warner Decision

"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", David McAtee, AT&T's general counsel said in a statement.

In the decision (PDF) closing the case, Judge Leon said that the government's arguments against the deal fell flat. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20. The Department of Justice, with the support of President Donald Trump, opposed the merger, arguing that the combined companies would be too powerful and reduce competition.

The judge's ruling will likely be seen by tech and telecom giants as a green light to pursue a slew of major media acquisitions.

The government has suggested an alternative to blocking the deal: requiring AT&T to sell its DirecTV unit or preventing it from acquiring Time Warner's Turner Broadcasting.

The $85.4bn merger will create a telecoms and media giant combining AT&T's mobile, cable and satellite TV business with Time Warner's portfolio of blue-chip media assets.

In making its case, the USA government argued that the merger of AT&T could harm consumers in a number of ways.

Nonetheless, Niknam thinks AT&T's transition to more streaming services could weigh on profitability this year. Of course, that was prior to the court's ruling on the AT&T and Time Warner merger today.

On the other side, AT&T and Time Warner (big as they may be) face steep competition from the FAANG companies (Facebook, Apple, Amazon, Netflix and Google), all of whom have made video a top priority.

Shares in entertainment companies and potential targets of new deals because of Leon's decision rose sharply - CBS shot up about 5 percent and Fox jumped 7 percent in after-market trading on hopes of a bidding war for it between Comcast and Disney.

The decision represents a setback for the Department of Justice, whose antitrust chief Makan Delrahim, had argued strenuously against the merger. If not completed by then, either company could walk away, and AT&T would have to pay a $500 million breakup fee.

Still, at least one company, Comcast, the largest United States cable provider, had been waiting for the court decision before making any large M&A moves in media, sources have said.

The government argued during the trial that if AT&T were to own Time Warner, it could violate antitrust law by using its market power to get higher prices from TV distributors.

Fans have been following the Disney/Fox deal closely, as a merger between the two companies would mean Marvel Studios would reacquire the rights to the X-Men and Fantastic Four franchises, both of which have been under Fox's control for decades. NY time in a D.C. courtroom that'll likely be packed with lawyers, journalists and investors.

It is worth remembering that the Justice Department is reviewing the T-Mobile/Sprint combination, and the Justice Department did not approve AT&T's purchase of Time Warner.

Critics charged that Trump had come out against the deal because of Time Warner's CNN, which has been highly critical of his presidency. AT&T did not immediately respond to a request for comment.

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