AT&T Inc may close its $85 billion deal to buy Time Warner Inc under an agreement reached on Thursday with the U.S. government, which might still appeal a case seen as a turning point for the media industry.
AT&T said it could close the deal by Friday. The government has not ruled out an appeal and has 60 days to file.
AT&T agreed to temporarily manage Time Warner’s Turner networks separately from DirecTV, including setting prices and managing personnel, as part of the deal approved by Judge Richard Leon late Thursday.
The conditions agreed to by AT&T would remain in effect until Feb. 28, 2019, the conclusion of the case or an appeal.
Leon of the U.S. District Court for the District of Columbia ruled on Tuesday that the deal to marry AT&T’s wireless and satellite businesses with Time Warner’s movies and television shows was legal under antitrust law. The Justice Department had argued the deal would harm consumers.
U.S. President Donald Trump, a frequent critic of Time Warner’s CNN coverage, denounced the deal when it was announced in October 2016.
The fact that Turner, which includes CNN, will be run separately from DirecTV makes a stay unnecessary, said Seth Bloom, a veteran of the Justice Department’s Antitrust Division who is now in private practice.
In its lawsuit aimed at stopping the deal, filed in November 2017, the Justice Department said that AT&T’s ownership of both DirecTV and Time Warner, especially its Turner subsidiary, would give AT&T unfair leverage against rival pay TV providers that relied on content like CNN and HBO’s “Game of Thrones.”
“This is clearly leaving open the door for the DOJ (Justice Department) to appeal,” Bloom said. “If Turner is run separately, they don’t really need a stay.”
The AT&T ruling is expected to trigger a wave of mergers in the media sector, which has been upended by companies like Netflix Inc and Alphabet Inc’s Google.
The first to come was Comcast Corp’s $65 billion bid on Wednesday for the entertainment assets of Twenty-First Century Fox Inc.
AT&T had been worried about closing its deal ahead of a June 21 deadline if the government won a stay pending an appeal. Any stay could take the deal beyond a June 21 deadline for completing the merger, which could allow Time Warner to walk away or renegotiate the proposed transaction with AT&T.
The government may have a difficult time winning on appeal because of the way Judge Leon wrote his opinion, four antitrust experts said.
“I don’t think this would be overturned. It is so rooted in the facts that I would be surprised if an appellate court overturned such a fact-laden opinion,” said Michael Carrier, who teaches law at Rutgers.
In a scathing opinion after a six-week trial, Leon found little to support the government’s arguments that the deal would harm consumers, calling the evidence for one argument against the deal “gossamer thin” and another “poppycock.”
The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data. It would also be the 12th largest deal in any sector, the data showed.