Judge clears the way for AT&T merger with Time Warner

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Comcast will formalize its all-cash offer to acquire most of Twenty-First Century Fox FOXA on Wednesday if U.S. District Court Judge Richard Leon approves AT&T T 's deal for Time Warner TWX tomorrow, according to people familiar with matter. The sheer scale of the deal is what led the Justice Department to file an antitrust lawsuit to try to prevent the merger.

U.S. District Judge Richard J. Leon completely rejected DOJ arguments that the merger would unacceptably drive up consumer pay-TV rates by hundreds of millions of dollars a year.

AT&T and Time Warner reject the government's theory and say they're motivated to sell their content as widely as possible. The government's case depended on a flawed model that raised too many doubts about the potential price increase for consumers, he said.

But Michael Copps, a former member of the Federal Communications Commission and an adviser to the left-leaning political group Common Cause, was dismayed. Two attempts by the Justice Department since 2000 were denied.

McInnis, who observed the entire six-week trial, predicts this outcome is the most likely. "There's no constraints", Copps said. His 172-page decision delivered a stinging defeat to Trump administration's Justice Department while opening the door for Comcast Corp.to bid for parts of 21st Century Fox and become an worldwide company.

But Salil K. Mehra, a professor at Temple's Beasley School of Law and an expert on antitrust, said "this is a courageous new world in which leverage issues and the data collection on individuals make it harder to predict what will happen". Mergers of companies that compete against each other are often blocked because they reduce the number of competitors in a given market.

As a candidate, President Donald Trump spoke out against the merger, and routinely posts negative messages on Twitter about the integrity of CNN, which is owned by Time Warner.

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However, in Verizon's most recent quarterly earnings call, executives said they would rather sit out the current consolidation, and instead build out its content offerings through partnerships with independent media companies.

Comcast is expected to offer $60 billion for the Fox regional sports networks, the FX cable channel, the Sky satellite-TV business in Europe, Fox movie and television studios, and Fox worldwide channels as early as Wednesday. For instance, it could compel a rival cable company like Comcast to pay sharply higher fees for the right to carry Time Warner shows like NBA basketball games or the hugely popular HBO drama "Game of Thrones". But Leon blocked discovery on certain White House communications that AT&T and Time Warner were seeking, and the companies dropped that defense, choosing to litigate the case on pure antitrust grounds.

There was also concern that the federal lawsuit might be politically motivated.

"If what you see is a pattern where friends of the president get their deals approved and his enemies are challenged, it's problematic", Levin said.

The Justice Department had argued that AT&T's acquisition of Time Warner would allow it to charge premium prices to rivals who relied on its Turner and HBO channels to woo customers to their cable plans, potentially giving it an unfair advantage in the pay-TV market.

If the court of appeals agrees to hear the case, a panel of three judges would only consider the evidence presented in trial.

The Justice Department is not likely to be put off by the loss, said Amy Ray of the law firm Cadwalader, Wickersham & Taft LLP, noting it had prevailed in stopping other mergers between rivals.