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Why the AT&T mega-merger is a green light for other businesses

AT&T can complete an $85 billion purchase of Time Warner, a federal judge ruled on Tuesday. Best known as a wireless provider, AT&T would acquire major content creators like HBO, CNN and Warner Brothers under the deal. The Justice Department argued it would hurt consumers, and some outside of government are worried about the impact. Amna Nawaz talks with David McCabe of Axios.

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  • Judy Woodruff:

    Now, the ruling today by a federal judge that AT&T can complete an $85 billion purchase of Time Warner.

    The decision was a significant loss for the Department of Justice, which had argued the deal would make the marketplace less competitive for consumers.

    As Amna Nawaz reports, the potential mega-merger would have a profound impact on the media, entertainment and telecommunications landscape.

  • Amna Nawaz:

    Judy, the decision comes almost two years after AT&T first announced its plan to buy Time Warner, and just one week before the companies face a deadline to complete the merger.

    The deal would mean that AT&T, best known as a wireless provider, but which also owns DirecTV, would own major content creators such as HBO, CNN, TBS and Warner Bros.

    That means AT&T would control rights to entertainment properties like "Game of Thrones," "Lord of the Rings," the LEGO movies, as well as live sports like the NBA and March Madness.

    Now, the judge put no conditions on the deal and told the government it should not seek a stay of his ruling. But some outside of government are worried about what it could mean for competition.

    David McCabe, who has been covering this for Axios, was there in the courtroom today, and joins me now.

    David, welcome to the "NewsHour."

    A lot of people keeping a very, very close eye on this case. Now that you know the merger can go ahead, what kind of effect is it likely to have on media companies, telecom companies, other potential deals in the space?

  • David McCabe:

    Well, so thank you so much for having me this evening.

    As you said, this was an unequivocal win for AT&T, both the decision not to apply conditions, but also Richard Leon's decision to encourage very forcefully the Department of Justice not to pursue an emergency stay in this case.

    And what it means for the rest of the industry is that it's go time, that, effectively, it is a high sign to go after the deals that might not have been approved had this deal failed.

    So, the first thing we're likely to see is Comcast to continue to one-up Disney's for 21st Century Fox. But that may not be the last in a series of deals that could reshape the space that touches almost every American consumer that watches video content.

  • Amna Nawaz:

    Well, talk to me a little bit from the consumers' perspective now, because, obviously, the Justice Department was arguing that, if this deal goes through, it means less competition, it's bad for consumers, potentially higher prices, fewer choices.

    Help me understand that fear a little bit. Is that still a viable fear, now that the merger has gone through?

  • David McCabe:

    So, the concern that the Justice Department articulated was that essentially prices could go up because AT&T would be leveraging the content that it had from the Time Warner deal against its competitors in the video space, those who compete with their subsidiary DirecTV.

    The judge said he didn't think DOJ met their burden of proof there. But I think what this means for consumers is that they're very likely to see a world in which, increasingly, the content they watch, the content they crave often is owned by the same people who deliver it to them.

    And what that means is, in many ways, an open question. But, for example, we have seen that you can get DirecTV NOW — this is AT&T's streaming service, a real-time live video streaming service — and it doesn't cost against your data cap often when you are an AT&T wireless subscriber.

    So, increasingly, there may be an incentive for companies to essentially bundle their content assets with the pipes that they control that get that content to consumers.

  • Amna Nawaz:

    David, you wrote in your first write-up for Axios that the case could have taken a more political turn. It is worth noting there was a lot of talk about whether or not there was pressure from the White House to bring forward this suit to try to stop this merger.

    It's no secret that President Trump is not a fan of CNN. CNN is owned by Time Warner. When he was a presidential candidate, Mr. Trump said he wouldn't allow this merger to go through under his administration.

    Did any of that play a role in the case?

  • David McCabe:

    So, it played no role really in the courtroom, because the judge had said that AT&T couldn't access documents that were key to making the case that the Justice Department case was politically motivated.

    But it has absolutely dogged the case. And I can tell you, I just came from a press conference with Daniel Petrocelli, who is AT&T and Time Warner's lead litigator, and kept getting asked again and again, do you think there was pressure here?

    So, this certainly is a long shadow over this case, even if it didn't show up much in the actually really technical legal wrangling.

  • Amna Nawaz:

    David, very quickly, before you go, now, this is a big week for the Internet. Not only does this merger potentially move forward, but the net neutrality rules also expired this week.

    How do both of those things together potentially change the way that people get or consume their content?

  • David McCabe:

    So, that remains to be seen exactly what it means for consumers.

    But it may foreshadow a world in which fewer companies control the consumer Internet experience, and there are fewer rules for them to play by.

  • Amna Nawaz:

    David McCabe of Axios, who has been covering this mega-merger deal, thanks so much for your time.

  • David McCabe:

    Thank you for having me.

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