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AT&T (T) Sinks, Time Warner (TWX) Gains as Federal Judge Approves Merger

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A federal judge has approved AT&T’s (T - Free Report) $85 billion merger with Time Warner , handing the telecom giant a massive victory in what has been the most intense antitrust case in decades.

Shares of AT&T sunk in after-hours trading shortly after the news, while Time Warner stock added as much as 4.5%. The judge’s decision will apparently allow AT&T to buy Time Warner without any significant conditions.

Analysts have said that such a decision might limit the government’s power to restrict mergers in the future, with many pointing to potential tie-ups between CVS (CVS - Free Report) and Aetna (AET - Free Report) , or Disney (DIS - Free Report) and 21st Century Fox (FOXA - Free Report) , as deals that could be affected by this precedent.

Judge Richard Leon filed the decision, which will ignite AT&T’s content ambitions and put the company in a better position to battle tech-media hybrids like Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , and Alphabet (GOOGL - Free Report) .

Government prosecutors attempted to argue that a combination of AT&T’s distribution network—its cellular and wired broadband infrastructure—and Time Warner’s original content—HBO, Warner Bros., and Turner Broadcasting—would create an anticompetitive environment in today’s evolving communications and media sector.

Now, AT&T will leverage those new properties to create a new telecom-media behemoth.

Initial investor reaction likely reflects hesitation toward the costs associated with the deal, but it is hard to think that the merger does not present exciting potential for AT&T.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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