In his ruling approving AT&T’s bid to purchase Time Warner, U.S. District Court Judge Richard Leon advised the Department of Justice to not try along with also contest the ruling, which was unexpected, according to an analyst.
“I think the biggest surprise here can be Judge Leon advising the DOJ not to try to contest This kind of ruling,” Craig Moffett told CNBC.
“of which can be a very real rebuke of the DOJ here,” said Moffett, founder of MoffettNathanson, a research firm, said Tuesday on “Closing Bell.”
The $85.4 billion deal comes with no conditions along with also adjustments ownership of cable channels such as HBO along with also CNN.
The ruling also comes with wide-ranging implications about what will be allowed in future mergers. A section of the Clayton Antitrust Act prohibits mergers along with also acquisitions when the effect “may be substantially to lessen competition, or to tend to create a monopoly.”
The Department of Justice released a statement after the decision, saying, “We are disappointed with the Court’s decision today. We continue to believe of which the pay-TV market will be less competitive along with also less innovative as a result of the proposed merger between AT&T along with also Time Warner. We will closely review the court’s opinion along with also consider the next steps in light of our commitment to preserving competition for the benefit of American consumers.”
Moffett said the win wasn’t easy for AT&T, along with also since the company can be so large Time Warner will only account for about 15 to 20 percent of the telecommunication company’s revenue.
“Getting Time Warner would likely be Great for AT&T’s income statement, yet bad for AT&T’s balance sheet,” Moffett said. He pointed out of which AT&T can be one of the most indebted companies inside the globe — about $249 billion in debt. Buying Time Warner will not ease This kind of burden.
“of which’s a risky proposition,” Moffett said.
Former AT&T Chairman along with also CEO David Dorman agreed of which was a big bet, yet one of which he said, “makes a lot of sense.”
“AT&T can be betting on the media business being a complementary business,” Dorman said Tuesday on “Closing Bell.”
“They understand offering products to customers can be a dumb pipe,” he said. “of which’s not as exciting as offering applications on of which pipe.”
Shares of AT&T fell about 2 percent in after-hours trading. Meanwhile, Time Warner stock was was up about 5 percent.
The Department of Justice was not immediately available to comment along with also AT&T did not immediately respond to a request for comment.