AT&T legal win could spur another jumbo bond; more M&As

An AT&T logo

An AT&T logo

The judge rejected the government's argument that the merger would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

AT&T would use its leverage over the must-have shows, in particular HBO's Game of Thrones or National Basketball Association games on TNT, to charge Comcast or Verizon more than it would charge itself for distributing Time Warner channels, giving itself a competitive advantage, the government claimed.

"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.

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties.

There have been persistent reports that Comcast, which owns the majority of NBC Universal, would make an offer to Murdoch and Fox's board that included more cash and less stock than Disney was offering. And the company said it plans to close the merger, which was announced a year and a half ago, on or before June 20.

Market players say they're expecting AT&T's go-ahead to unleash further M&A activity down the road - much of which will be funded in the credit markets.

Leon has ruled in favor of AT&T in the government's antitrust suit to block AT&T's proposed merger with Time Warner . Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.

A vertical merger is when two companies who provide different or complementary offerings join forces, giving consumers access to a more comprehensive set of services, at a lower price, while still generating profits.

Announced in October 2016, it was seized on by then presidential candidate Donald Trump as the sort pf deal his administration would block.

Months before Trump nominated him to the Justice Department's leading antitrust position in 2017, Delrahim even had expressed an openness to the combination of AT&T and Time Warner, predicting in an interview on Canadian television that it might not trigger any regulatory concerns.

Leon was also unimpressed with the government's theory that AT&T would use its ownership of Time Warner to withhold content from streaming multichannel video programming distributor services like DISH's Sling TV, Hulu Live and Google's YouTube TV. "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".

After the ruling, AT&T was down 2.125% and Time Warner was up 4.55% in extended trade.

Former Federal Communications Commission staff attorney Blair Levin said a loose interpretation of antitrust law would allow the government to block nearly any deal, and open up the process to political interference. The Department of Justice had sued AT&T to block the merger.

"We knew we had to have scale", he said, according to Variety.

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