A judge just approved the $85 billion merger between AT&T and Time Warner — and it will affect the future of media M&A for decades to come

AT&T Chairman and CEO Randall Stephenson smiles on Capitol Hill in Washington, Wednesday, Dec. 7, 2016, prior to testifying before a Senate Judiciary subcommittee hearing on the proposed merger between AT&T and Time Warner.

  • The $85 billion merger between AT&T and Time Warner was approved Tuesday.
  • The DOJ lost its antitrust lawsuit to block the vertical merger.
  • The case was closely followed by an industry amid other M&A deals.

In one of the most anticipated antitrust rulings in decades, federal judge Richard Leon approved the $85 billion merger between AT&T and Time Warner.

The deal, nearly two years in the making, netted a massive and potentially legacy-sealing win for AT&T chief executive Randall Stephenson.

The case was closely followed by an industry in the midst of consolidation.

“This decision from Judge Leon will have broad ramifications for the tech, telecommunications and media sector for decades to come,” Daniel Ives, the chief strategy officer at GBH Insights, told Business Insider in an email before the decision was handed down.

“This deal will accelerate content and streaming initiatives between Time Warner properties and AT&T and be a major shot across the bow to other cable and wireless players with all these assets under one hood,” he said.

Many antitrust lawyers predicted that AT&T would prevail.

“The conventional wisdom is that the government had a steep hill to climb bringing the first vertical-merger case,” in over 40 years, Eric Mahr, a former director of litigation at the Department of Justice, told Business Insider.

The DOJ also faced harsher questioning from the judge, who came off exasperated at times during the government’s arguments.

“Isn’t it a bit of a kabuki dance where everyone threatens to go dark, but then it never ends up happening?” Judge Leon asked in response to a statement about the threat of content blackouts.

The decision is a blow for the DOJ. “We are disappointed with the Court’s decision today,” Assistant Attorney General Makan Delrahim said in a statement. “We will closely review the Court’s opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers.”

The industry is now turning its eyes to another potential megamerger — the fight between Comcast and Disney to acquire 21st Century Fox. With AT&T’s victory over the DOJ, it seems likely that Comcast will put together its bid for Fox quickly.

A Comcast-Fox deal would be another vertical merger, like the AT&T–Time Warner deal. Tuesday’s opinion shows the high burden the government must clear to win a vertical-merger suit.

But some experts urged caution in thinking that the DOJ’s top antitrust official Makan Delrahim would allow a Comcast-Fox deal to go through unopposed.

“It’s not hard to imagine [Delrahim] doubling down to send a message to companies,” an industry analyst told Business Insider.

And the AT&T–Time Warner deal is not necessarily yet in the clear. The DOJ can still appeal the case, a possibility some industry experts think will happen.

“Makan Delrahim seems personally invested in this case, so we suspect DOJ would appeal,” Paul Gallant, an analyst at Cowen & Co. wrote.

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