Will the DOJ appeal AT&T’s $85B Time Warner deal approval?

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Peter Dinklage and Conleth Hill in a scene from Game of Thrones.

USA district judge Richard Leon sided with AT&T, approving the deal without conditions.

The Trump Justice Department had sued to block the $US85 billion merger, arguing it would hurt competition in cable and satellite TV and jack up costs to consumers for streaming TV and movies.

At the heart of the DOJ's complaint is an assumption that the merged entity would use its market power to raise the price of content now owned by Time Warner, or threaten to withhold programming, including hit shows such as Game of Thrones and NCAA March Madness.

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties. Comcast, for example, would like to outbid the Walt Disney Co. for some of 21st Century Fox's assets, but has held off until the trial ended. The transaction will close on June 20th and makes AT&T the new owner of CNN, HBO, TNT and TBS.

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United States district judge Richard Leon dismissed the antitrust case brought by the justice department last November, the culmination of a 20-month ordeal that has seen the deal attacked by Donald Trump, critics of media consolidation and consumer groups. The theory seems to be that the merged company would simply forgo this revenue in a speculative hope that withholding Time Warner content from distributors would induce masses of viewers to switch to AT&T-and maybe, one day, put competitors out of business. In a statement, Delrahim said he was "disappointed" in the ruling but stopped short of saying his division would appeal, saying only that it would "consider next steps in light of our commitment to preserving competition".

Ahead of the ruling, AT&T was up about 1% in early trading while Time Warner was higher by about 0.9%. And Leon's decision is likely to trigger a wave of new mergers, as many executives were waiting to for the outcome of AT&T's bid before pushing forward with their desired deals. AT&T CEO Randall Stephenson also said a year ago, "You shouldn't expect that we would sell something larger [than CNN] to get the deal done". Deals such as this one, in which the two companies are in related industries but do not produce competing products, are usually approved by federal regulators.

Judge Richard Leon of the U.S. District Court for the District of Columbia said at a hearing that he has found, after a six-week trial, that the deal does not violate antitrust law and can proceed.

Months before Trump nominated him to the Justice Department's leading antitrust position in 2017, Delrahim even had expressed an openness to the combination of AT&T and Time Warner, predicting in an interview on Canadian television that it might not trigger any regulatory concerns.

The decision comes despite criticism from Trump, a frequent detractor of Time Warner's CNN and its coverage. President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few".

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