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AT&T cleared for Time Warner takeover

US telecoms firm AT&T has been given the go-ahead for its US$85.4bn acquisition of Time Warner, parent company of Warner Bros, HBO, Turner and CNN.

The deal will see the likes of Game of Thrones move under AT&T ownership

The deal, which was first proposed more than 18 months ago, received the green light from a US federal judge yesterday after he rejected a move from government to try and block it.

The decision is expected to open the gates to a flurry of high-level M&A activity, in particular paving the way for a major battle between Comcast and Disney for 21st Century Fox.

The US Justice Department (DoJ) had claimed AT&T, which owns satellite TV platform DirecTV, could end up charging rival distributors more for Time Warner content, resulting in higher prices for consumers.

But Judge Richard J Leon of the US District Court in Washington said the DoJ had failed to prove its argument that the acquisition would lead to fewer choices for consumers and higher prices for TV and internet services.

Instead, he accepted the position of AT&T and Time Warner execs: that content creation needed to be increasingly married with distribution for media companies to survive in a world dominated by tech giants.

The landmark case saw Leon reject the lawsuit brought by the US government last November to block the deal. Significantly, the judge cleared the way for a takeover without imposing any conditions on AT&T, such as the sale of DirecTV or Time Warner’s cablenet operator Turner.

Having reviewed the DoJ’s case, Leon concluded the government had “failed to meet its burden to establish that the proposed ‘transaction is likely to lessen competition substantially,’” according to court documents published yesterday.

In a particularly strong-worded conclusion, the judge wrote that he did not believe “the government has a likelihood of success on the merits of an appeal,” were it to consider one.

“I hope and trust that the government will have the good judgement, wisdom and courage to avoid such a manifest justice,” he wrote. “To do otherwise, I fear, would undermine the faith in our system of justice of not only the defendants [AT&T and Time Warner], but their millions of shareholders and the business community at large.”

With AT&T now looking to complete the deal before the end of June, the telco will soon own a number of key assets and a substantial content pipeline.

The telco will take ownership of Time Warner’s principle divisions: premium cablenet HBO, channel operator Turner and studio Warner Bros, which includes film and television divisions. Within Turner, AT&T will own all cable properties, including TNT, TBS, Cartoon Network and CNN.

HBO’s premium programming, including crown jewels Game of Thrones and The Sopranos, will also come into AT&T’s possession. Additionally, the telco will acquire Time Warner’s 10% share of streamer Hulu.

Commenting on the ruling, David McAtee, AT&T’s general counsel, said the firm was “pleased that the court has categorically rejected the government’s lawsuit to block our merger with Time Warner.”

“We thank the court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government,” he said. “We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile and innovative.”

Makan Delrahim, assistant attorney general at the DoJ’s antitrust division and chief plaintiff, said the government was disappointed with the outcome and was considering its next steps. “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,” he said.

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