13 Jun 2018

AT&T-Time Warner merger to change media landscape

3:31 pm on 13 June 2018

Analysis - The global media landscape may be in for a major shake-up in the wake of the approval of a mega-merger between telecoms giant AT&T and media firm Time Warner.

People walk past the Time Warner Center, June 12, 2018 in New York City. A federal judge today said that AT&T can move forward with its $85 billion acquisition of Time Warner, which the U.S. Justice Department had sought to block.

A US judge today cleared the AT&T merger with Time Warner. Photo: Drew Angerer / Getty Images / AFP

US government regulators tried to block the US$85 billion (NZ$120bn) deal, arguing the merger would reduce competition in pay TV and lead to higher prices for consumers.

However, the Federal Court rejected those arguments and approved the deal without conditions.

The deal is what is known as a vertically integrated merger: a joining of two companies that do not directly compete with each other.

It will bring together AT&T's significant wireless, satellite television and internet business with Time Warner's media properties, which include HBO and CNN.

It was similar to last year's failed bid by New Zealand pay-TV operator Sky Television and telecommunciations company Vodafone to merge, which was blocked by the Commerce Commission.

The judge advised the US regulators that their arguments were so weak that they should not even bother to appeal, although several legal experts believe the ruling is so significant it will not go unchallenged.

An AT&T cellphone store (TOP) in Springfield, Virginia, on October 23, 2014, and the Time Warner company logo on the front of the headquarters building, 24 November, 2003 in New York. 
A US judge cleared the AT&T merger with Time Warner with no conditions on June 12, 2018.

The merger agreement will have no conditions imposed on it by the court. Photo: AFP

The case comes as the growth of online firms like Amazon and Netflix have scrambled traditional lines of competition, spurring consolidation and prompting concerns about monopolies.

But regardless of that outcome the decision is being seen as a green light for other big deals, which have been sitting in the wings waiting for the ruling.

Mobile company Comcast is expected to be in quick with a bid for 21st Century Fox assets, including its stake in Britain's Sky, in a challenge to a deal announced between Fox and Disney last year.

The gates are expected to open, with US telecom companies such as Verizon, Sprint and T-Mobile looking to snaffle up media concerns such as Viacom, Discovery, and CBS - all familiar names on New Zealand screens.