Comcast Hasn't Out-Foxed Disney Yet

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The industry is now turning its eyes to another potential megamerger - the fight between Comcast and Disney to acquire 21st Century Fox.

Disney already struck a $52.4 billion all-stock deal to buy the Fox properties, but Comcast announced that it is making an all-cash offer to "provide [Fox] shareholders with certain value and immediate liquidity".

"We are grateful to the court for seeing it the way we did", Gindseberg said.

The AT&T lawsuit is the first time in decades that a government challenge of a "vertical merger" - involving two companies that do not directly compete - has gone to court. And Leon's decision is likely to trigger a wave of new mergers, as many executives were waiting to for the outcome of AT&T's bid before pushing forward with their desired deals.

To see how this could happen, consider that, after the merger, AT&T would have the rights to all of HBO's output, CNN, live National Basketball Association and NCAA broadcasts, and many more desirable Time Warner properties.

In the decision (PDF) closing the case, Judge Leon said that the government's arguments against the deal fell flat.

The decision by Judge Richard Leon is a setback for Makan Delrahim, President Trump appointee to the top spot in the Justice Department's antitrust division, challenging his view of antitrust laws in the digital era.

Initially, the companies planned to use a "selective enforcement" defense, alleging that the administration was blocking the deal because of Trump's disdain for CNN. AT&T and Time Warner argue they're simply trying to stay afloat in the new streaming environment. "We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner".

Hulu is now jointly controlled by Disney, Fox, and Comcast which each own a 30 percent share.

Comcast Hasn't Out-Foxed Disney Yet
Comcast Hasn't Out-Foxed Disney Yet

The mega-merger is a high-stakes bet by AT&T Inc. on the synergy between companies that produce news and entertainment and those that funnel it to consumers.

The acquisition will create one of the most powerful companies in global media, marrying AT&T's widespread consumer distribution capabilities with the crown jewels of Time Warner, including HBO, Warner Bros. film and TV studios, and TV channels including CNN, TNT and TBS. Still, the Justice Department's case laid out a traditional antitrust theory: that combining two companies in different parts of a supply chain can give the merged company the ability to harm rivals.

AT&T would use its leverage over the must-have shows, in particular HBO's Game of Thrones or National Basketball Association games on TNT, to charge Comcast or Verizon more than it would charge itself for distributing Time Warner channels, giving itself a competitive advantage, the government claimed.

Today's ruling comes as part of the antitrust lawsuit levied by the Justice Department previous year.

"The bulk of the third-party competitor testimony proffered by the government was speculative, based on unproven assumptions, or unsupported - or even contradicted - by the government's own evidence", Leon wrote.

Experts have said that the DOJ attorneys may have been somewhat hamstrung by the fact that AT&T's acquisition of Time Warner is somewhat unusual.

If AT&T is successful in its bid to buy Time Warner, it will nearly certainly find itself competing in a media market dominated by other large, integrated providers. "The fact is that they've gotten a little easier, and we'll see a big flurry of deals".

It is worth remembering that the Justice Department is reviewing the T-Mobile/Sprint combination, and the Justice Department did not approve AT&T's purchase of Time Warner.

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