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Court Clears Path For AT&T To Buy Time Warner, Overrules Trump Opposition


06/15/2018


Court Clears Path For AT&T To Buy Time Warner, Overrules Trump Opposition
A wave of possible corporate mergers would begin after the court approval of the AT&T Inc deal to take over Time Warner Inc for $85 billion. The court decision was also a strong rebuttal of the effort by the U.S. President Donald Trump’s administration to prevent the merger.
 
The deal could be closed as early as next week. this deal is viewed to be a crucial one for the U.S. media industry as it has unset a numbe4r of firms such as Netflix Inc and Alphabet Inc’s Google that create and sell content to consumers directly online without the need for a mediatory and pricey cable subscription. buying content companies are seen as a means to generate revenues by cable, satellite and wireless carriers.
 
The deal was denounced soon after its announcement in October 2016 by Trump who is a known critic of Time Warner’s CNN and its coverage. The U.S. District Judge Richard Leon called one of the governments’ arguments opposing the deal as “gossamer thin” and another “poppycock” while it concluded that the government’s argument that the deal would harm consumers to be unfounded.
 
Deals such as Comcast Corp’s offer to purchase some Twenty-First Century Fox Inc assets potentially the first out of the gate could now go through and the industry could see a wave of pay TV companies purchasing television and movie makers.
 
According to Thomson Reuters data, in the global telecom, media and entertainment industry, this deal would be the fourth largest ever. The data further showed that the deal would be the 12th largest deal in any industry.
 
Leon, who was particularly critical of the government stand on the deal, urged the government not to request for a stay on the order pending a potential appeal and said that it would be "manifestly unjust" to seek such an order and that such an order would be unlikely. Leon further noted that the any form of competitive harm arising out of the deal was not shown bv the government in it’s argument.
 
“That’s a legal shocker,” said J.B. Heaton, an attorney and consultant on litigation and regulatory proceedings. “I think we’ll see now that companies will be much more confident about vertical mergers,” he added, referring to deals where a company merges with a supplier.
 
While shares of Time Warner rose more than 5 percent in after-hours trade after the ruling,. There was a fall of 1.3 percent in share of AT&T.
 
Riding on expectations that Comcast and Walt Disney Co could begin a bidding war for purchase of the media assets Twenty-First Century Fox, the shares of the later saw a rise of 7 percent in extended trade following the court decision. There was drop of 4.3 percent and 1.8 percent in the shares of Comcast and Walt Disney respectively.
 
“This will be a blockbuster summer for media mergers,” said Mary Ann Halford, senior adviser to OC&C Strategy Consultants.
 
“Consumers should fear a cascade of unchecked mergers and acquisitions to further consolidate the telecom industry resulting in less choice, fewer competitors and higher prices,” Senator Richard Blumenthal, a Democrat, said in a statement.
 
(Source:www.reuters.com)