Telecom giant AT&T will be allowed to move forward with the merger it negotiated with Time Warner, a federal judge ruled Tuesday in a long-awaited decision expected to have major implications for future mergers and how consumers navigate the media landscape.
If AT&T is successful in its bid to buy Time Warner, it will nearly certainly find itself competing in a media market dominated by other large, integrated providers.
Leon said the government's case fell short on all counts and warned against seeking to delay the deal with an appeal saying that would cause irreparable harm to the companies. In addition, T-Mobile and Sprint are direct competitors, so their merger is perhaps more likely to be seen as anti-competitive than a union of AT&T and Time Warner. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news".
"I conclude the government has failed to meet its burden of proof", Leon said.
Leon rejected the notion of temporarily suspending the merger for a possible appeal by the government. Short-term effects are likely to be favorable - things like a new skinny streaming service, or perks like free HBO for AT&T wireless customers - but as Time Warner continues to negotiate rates and packages with cable companies and new streaming services, the effects will become more clear. Last fall, he presented AT&T and Time Warner with two options: Sell the majority stake in either DirecTV or Turner Broadcasting.
The Justice Department had repeatedly suggested the judge consider forcing AT&T to divest some of Time Warner's cable channels.
The case is commonly characterized as the first major "vertical" deal challenged by federal lawyers in court in more than four decades.
Trump's frequent attacks on CNN led to much speculation, including from AT&T Chairman and CEO Randall Stephenson, that the president's opposition stemmed from anger over the network's coverage rather than concern over greater corporate consolidation.
The companies' main economist, Dennis Carlton from the University of Chicago, refuted Shapiro's model as overly complicated and rejected his conclusions.
Judge Richard Leon said the U.S. government failed to meet the burden of proof that the tie up between the largest United States pay TV operator and media entertainment giant Time Warner would harm competition. In fact, he suggested, consumers could end up paying less after a merger - maybe even $500 million less annually. The company said in a statement that it plans to complete the takeover on or before June 20.
AT&T has said it needs to buy Time Warner to compete with the likes of Amazon, Netflix and Google in the shape-shifting streaming-TV environment.