Mergers represent a method for companies in California to grow, but few will attain the scale of the one between AT&T and Time Warner. A federal judge has approved the joining of the media companies after a six-week trial initiated by the U.S. Department of Justice. The government’s lawsuit had sought to block the merger on the grounds of reducing competition. The defendant companies argued that they needed to join forces to compete with Netflix and Amazon. The approval of the deal could pave the way for other mergers of large companies, like the proposed deals between CVS and Aetna and Cigna and Express Scripts.
Although the Justice Department could appeal the decision, the agency has little time to take such an action. AT&T and Time Warner plan to proceed quickly. Their merger brings Time Warner’s substantial television assets of HBO and Turner Broadcasting into the huge AT&T telecom distribution system of internet service and DirecTV.
The assistant attorney general in charge of the Justice Department’s antitrust division expressed disappointment in the court decision. He said the merger would reduce competition and innovation in the pay television market. In a public statement prior to the court ruling, he said that a win for the government would prevent the merged companies from serving as the “gatekeeper of competition” for television.
When companies buy other businesses, many regulatory and legal concerns could arise for the parties involved. An owner or executive could consult an attorney knowledgeable about mergers and acquisitions when planning a deal. A lawyer could assist his or her client with numerous issues, such as valuation of assets, due diligence and the terms of the contracts that guide the transition.
Source: VOX, “Judge approves AT&T-Time Warner merger“, Emily Stewart, June 12, 2018