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Volume 25 No. 110
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AT&T Set Up To Be Major Media Player With Time Warner Approval

If AT&T merges with Time Warner, it would gain NCAA Tournament rights

A federal judge yesterday "cleared AT&T's path toward becoming a major player in entertainment and shut down the government's attempt to block the legacy telecom's merger with Time Warner," according to a front-page piece by Repko & Benning of the DALLAS MORNING NEWS. The ruling is a "major victory" for Dallas-based AT&T, which has "waited for about 20 months to move forward with the acquisition." The merger will turn AT&T into the owner of "well-recognized TV and movie brands, in addition to distributing TV, internet and cellphone service to millions of customers." U.S. District Judge Richard Leon in a "complete rebuke" of the Justice Department's arguments "sided with AT&T and did not recommend any conditions to the deal." AT&T Senior Exec VP & General Counsel David McAtee in a statement said that the company "plans to close the deal by June 20." Repko & Benning note Time Warner "adds a missing piece to AT&T's portfolio: popular content," including Turner's "rights to the NBA playoffs games" (DALLAS MORNING NEWS, 6/13). In N.Y., Kang, Lee & Cochrane in a front-page piece write the approval of the $85.4B deal is "expected to unleash a wave of corporate takeovers" (N.Y. TIMES, 6/13).

WINNING BET:'s Chmielewski, Hayes & Patten wrote the ruling also "cements the legacy" of AT&T Chair, CEO & President Randall Stephenson, who had "bet the wireless carrier's future on its ability to capitalize on the growing importance of mobile devices as screens of choice for video viewing." AT&T's stock has fallen 15% over the last two years, as "wireless and pay TV subscriptions have stagnated." The approved deal also "seemingly fortifies Time Warner in the intensifying battle with media interlopers Amazon, Google and Netflix" (, 6/12). The WALL STREET JOURNAL's Drew FitzGerald cites sources as saying that Stephenson was "unlikely to survive" in his current role if his merger strategy had "been rejected." Stephenson in less than three years has "transformed the phone company he inherited into one of the world's biggest entertainment companies." Stephenson said that he "plans to leave Time Warner's management alone to avoid rocking the boat" (WALL STREET JOURNAL, 6/13). In Dallas, Mitchell Schnurman writes for Stephenson, the merger is a "chance to create a new legacy." Although AT&T is "losing money" on OTT service DirecTV Now, the platform has "attracted almost 1.5 million subscribers in a year and a half" (DALLAS MORNING NEWS, 6/13).

SMACKDOWN FOR DOJ: The WALL STREET JOURNAL's Brent Kendall writes there is a "reason the government rarely challenges so-called vertical mergers like AT&T-Time Warner: The cases are hard to win." The AT&T trial was the "first fully litigated vertical merger case in 40 years" (WALL STREET JOURNAL, 6/13). The HOLLYWOOD REPORTER's Eriq Gardner wrote the trial itself "presented competing visions of the media industry's future." The government "argued that the AT&T/Time Warner merger would mean that consumers would have to pay hundreds of millions of dollars more for popular programming" such as the NCAA Tournament (, 6/12). The WALL STREET JOURNAL's Kendall & FitzGerald in a front-page piece write yesterday's ruling marks a "historic defeat" for the Justice Department. President Trump was "unusually direct in opposing the deal, both before and after taking office, giving the case an unusual political cast." Leon said that he "hoped the Justice Department would have the 'wisdom' not to seek an emergency stay of his ruling, saying such a legal maneuver would be 'manifestly unjust' to AT&T and Time Warner" (WALL STREET JOURNAL, 6/13).

FEELING VINDICATED: AT&T's lead attorney Daniel Petrocelli said that the ruling was a "long-overdue validation." Petrocelli: "The judge's decision categorically rejects the government's bid to block this historic merger." But Petrocelli "declined to pin blame" on Trump for "purposely bringing the suit as retribution against his longtime media foe, CNN, or do any kind of a touchdown dance" (, 6/12). In N.Y., Andrew Ross Sorkin writes the DOJ's attempt to block AT&T "never made sense on the merits of the case." Now that the government has lost its case, companies across the world will be "spinning up all sorts of megadeals to pursue on their assumption" that Trump's administration "won't want to risk losing again" (N.Y. TIMES, 6/13).

OPENING THE FLOODGATES? The HOLLYWOOD REPORTER's Szalai & Bond wrote yesterday's ruling has bankers "salivating over the next mega-deal." CBS, Viacom, Lionsgate and "maybe even AMC Networks have been mentioned as possible M&A targets or buyers" (, 6/12). Financial Times Global Media Editor Matthew Garrahan said “anything is up for grabs at the moment.” CNBC’s Brian Sullivan: “The whole dealmaking landscape has now just changed” ("Worldwide Exchange,” CNBC, 6/13). In Boston, Hiawatha Bray writes yesterday's decision could also "increase the likelihood" that T-Mobile will be "granted permission to acquire its rival Sprint" for $26B (BOSTON GLOBE, 6/13). The WALL STREET JOURNAL’s Shalini Ramachandran notes across the media industry, moguls are "calculating whether now is the time to exit." Liberty Media Chair John Malone, who owns stakes in Discovery, Lionsgate and Charter, has been "advocating for a roll-up of content companies for years" (WALL STREET JOURNAL, 6/13).

WELCOME TO THE NEW AGE: In L.A., James & Faughnder write the merger "could reverberate for years to come by turning the media industry into a land of fewer giants" (L.A. TIMES, 6/13). The AP's Gordon & Anderson write the merger also "highlights how corporate America wants to adapt to deal with its new environment" (AP, 6/13). Needham & Co. Managing Dir Laura Martin: “In the last 18 months, what's happened is that the budgets for Facebook and Apple and Amazon have gone from $1 billion to try to compete with film and TV to $5 billion, $8 billion. They have unlimited cash. ... All these firms must get bigger to try to compete with the Amazons and Apples of the world” (“Worldwide Exchange,” CNBC, 6/13).