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AT&T-Time Warner ruling prompts Comcast-Fox deal

By MEG JAMES and RYAN FAUGHNDER
Los Angeles Times

June 14. 2018 12:32AM
A trader (left) deals in AT&T and Disney stocks on the floor of the New York Stock Exchange (NYSE) in New York City on Wednesday. (REUTERS/Brendan McDermid)

Tuesday's landmark AT&T-Time Warner merger ruling could reverberate for years to come by turning the media industry into a land of fewer giants.

U.S. District Judge Richard Leon decided that AT&T could complete its $85.4-billion takeover of Time Warner Inc., which owns HBO, CNN, TNT, TBS and Warner Bros. AT&T already is the nation's largest pay-TV provider and the deal — which is expected to be finalized by June 20 — will transform AT&T into one of Hollywood's biggest players with "Superman" and "Harry Potter" movie franchises and such television shows as "Westworld" and "Big Little Lies."

The Justice Department sued to block the merger, but after a six-week trial the judge said federal prosecutors, led by antitrust chief Makan Delrahim, failed to prove that the merger would harm consumers. His ruling signaled a more favorable climate in Washington for blockbuster combinations and probably will damp the government's enthusiasm to pursue similar lawsuits, experts said.

"It will certainly prompt additional media mergers," George A. Hay, a professor at Cornell Law School, said Tuesday.

Comcast Corp. Chief Executive Brian Roberts was first to pounce. Comcast announced Wednesday that it is making another run at buying much of Rupert Murdoch's 21st Century Fox.

Comcast Corp. offered $65 billion for the businesses Twenty-First Century Fox had already agreed to sell to Walt Disney Co.

Comcast confirmed last month that it was preparing a higher all-cash offer than Disney’s $52 billion all-stock deal for Fox’s media assets, but had been awaiting the outcome of the court hearing on the AT&T deal before bidding formally.

Fox in December agreed to sell its film, television and international businesses to Disney.

Leon's decision Tuesday came nearly 20 months after AT&T unveiled its Time Warner acquisition. Since then, other media companies have announced acquisitions: Discovery Communications this year bought Scripps Networks Interactive, owner of Food Network and HGTV. Television station owner Sinclair Broadcast Group is trying to buy Tribune Media, which owns such prominent stations as KTLA-TV Channel 5 in Los Angeles. Viacom has also explored merging with CBS, and other Hollywood players including Sony Pictures Entertainment and Santa Monica-based Lionsgate could be up for grabs.

Media companies are looking to bulk up to better compete with such deep-pocketed tech companies as Netflix, Amazon and YouTube that are encroaching on their turf. Murdoch, for example, has said his decision to sell much of the media empire he built was prompted by fears that Fox would be too small to effectively compete.

Reuters contributed to this report


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