This was a big week for AT&T (NYSE: T) Time Warner. They got the OK from a federal judge to proceed with their massive merger, a $85.4 billion deal, says The New York Times. The Justice Department had tried to block the merger, but Judge Richard J. Leon of U.S. District Court in Washington said the Justice Department had not proven its case that the merger would create unfair competitive advantages for the combined company.

The Justice Department filed suit in November 2017 to stop the merger. The case was brought to trial and, after six weeks, the defendants prevailed, just shy of the June 21, 2018 break-up date for the deal. If the court had not ruled by the June 21 date, AT&T would have had to pay a $500 million break-up fee to Time Warner if the deal had not been concluded. The Justice Department has 60 days to appeal the decision.

According to CNN, AT&T and Time Warner had previously agreed to wait until six days after the ruling before completing the deal, so the government would have time to consider asking for a stay. Apparently, they’ve changed their minds.

‘If there ever were an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one. Small wonder it had to go to trial,’ said Judge Leon’s 172-page memorandum opinion filed June 12.

‘Ultimately, I conclude that the Government has failed to meet its burden to establish that the proposed “transaction is likely to lessen competition substantially,”‘ wrote Judge Leon. “As such, based on that conclusion, and for all the reasons set forth in greater detail in this Opinion, the Court DENIES the Government’s request to enjoying the proposed merger.’

AT&T announced last night they had completed the acquisition, bringing together Warner Bros., HBO and Turner with AT&T’s video, mobile and broadband business, reports CNN. The merger of the two companies combines premium content with high-speed networks and direct-to-consumer distribution.

‘The content and creative talent at Warner Bros., HBO and Turner are first-rate. Combine all that with AT&T’s strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience,’ said Randall Stephenson, chairman and CEO of AT&T Inc., in a news release. ‘We’re going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers.’

Jeff Bewkes, former chairman and CEO of Time Warner, will serve as a senior advisor during the transition. The following executives will lead AT&T’s four business segments:

• John Donovan will serve as CEO of AT&T Communications.
• John Stankey will be the CEO of AT&T’s media business. The media business will include HBO, Turner and Warner Bros. In 2017, the businesses had combined revenue of $31 billion. A new name for this business segment will come later.
• Lori Lee will serve as CEO of AT&T International and as global marketing officer at AT&T Inc.
• Brian Lesser will be the CEO of AT&T’s ad and analytics business.

AT&T stock initially peaked on June 12 at $34.35, the day the ruling was issued, but it had dropped to $32.52 per share as of 7:59 p.m. EDT yesterday.

Insider Take:

Various news sources like Reuters speculate that this merger will trigger other mergers among media and entertainment companies. They may be right. Wednesday Comcast bid $65 million for most of 21^st Century Fox, putting it in a bidding war with Disney who offered $52.4 million for the same media assets, reports CNN. The winner of the bidding war would own Fox’s movie studio, FX, National Geographic and Fox’s stake in Hulu, among other assets. Rupert Murdoch would retain ownership of Fox News, Fox Sports national cable channels and the Fox broadcasting network.