A federal judge approved the merger between AT&T and Time Warner, rejecting the government’s efforts to stop the deal. The merger is valued at $85.4 billion. The court’s decision is expected to provide the right precedence for future corporate takeovers in these industries. The judge presiding over the case in a United States District Court in Washington said that the Justice Department failed to present enough evidence to demonstrate that the acquisition of Time Warner by AT&T would result in fewer choices for consumers or increased prices for TV and internet services.
Analysts have argued that the merger could create one of the biggest telecoms and media powerhouses in the US that could reshape the landscape in both industries. The combined companies will have several entertainment options in a content library that includes some of the most popular shows in the market. There will also be additional news channels like CNN on offer too. AT&T, on the other hand, will bring in a vast distribution infrastructure that will allow people to access these entertainment options through wireless or satellite television services.
Executives in the media industry have always maintained that there’s a need to merge content production and distribution in order to compete against tech companies like Netflix and Amazon. The streaming platforms have the required infrastructure to allow for convenient access to content. Although, when they started, companies like Netflix were streaming licensed materials from other content producers in the media world, several years ago they started offering original content. Ever since, the streaming services have acquired a massive market share and market value.
As more and more people are starting to watch TV online, traditional media houses could face an existential risk if they fail to adapt in line with current trends. The deal between Time Warner and AT&T is designed to achieve this. Interested parties in media and telecoms were closely following the six-week trial in Washington. Analysts said at the beginning of the antitrust case that its outcome could significantly affect how mergers in telecommunications and media industry will be done in the future.
It appears though that the outcome is favorable to these companies. It’s very likely that the Time Warner and AT&T merger won’t be the last one. Nonetheless, the ruling is also a complication for the Justice Department and its antitrust chief Makan Delrahim. Delrahim had decided to sue in a bid to block the deal against convention. Deals like this one have always been approved by federal regulators. After all, even though Time Warner and AT&T are in related industries, they don’t intend to produce competing products.
The antitrust chief had requested from both companies to sell major parts of their operations in order to get federal approval for the merger. The demands were rejected instantly by top executives of both companies. There was even a lawsuit filed in November last year.