With yesterday’s decision by a federal judge to give the green light to Dallas-based AT&T’s plan to take over Time Warner, the telecommunications company is about to become one of the big players in movies, TV, news and much more. It’s an $85 billion deal that the Justice Department fought – they argued putting Time Warner and AT&T together creates a monopoly that’s bad for consumers. The judge didn’t agree.
Tom Benning, a Washington-based reporter for the Dallas Morning News, says yesterday’s ruling was surprising because it was so unequivocal. And it will have a major impact on the media business.
“There’s no way to get around it,” Benning says, “this is just a monumental victory for AT&T. The judge blistered the Department of Justice, called its case essentially weak.”
Benning says Judge Richard Leon said in his ruling that it would be “manifestly unjust outcome if [the government] tried to seek a stay, pending appeal on this case.”
Such a successful vertical merger – of two companies that do not compete – is likely to encourage other combinations. Benning says those mergers are usually looked upon favorably by regulators anyway, but the AT&T-Time Warner deal, coming as it did in the wake of Justice Department objections, is likely to signal more.
Benning says it’s difficult to say what the judge’s ruling means for horizontal mergers between competitors.
“More so if this had been blocked, you’d see a huge chilling effect on the business industry and trying to make these sort of transactions,” he says. “This at least says ‘maybe go for it.’”
More than shifting the operations of Time Warner entities to Texas, Benning says the merger will bolster AT&T’s presence in the entertainment world, where tech companies like Amazon and Netflix have been facing off against traditional media companies like Time Warner, Hollywood studios and TV networks.
“They felt the sands shifting under their feet,” he says “where you have people cutting the cord, watching TV on on their cell phones, or via Netflix, Hulu, that sort of thing.”
Written by Shelly Brisbin.