WASHINGTON • AT&T won court approval on Tuesday to buy Time Warner for US$85 billion (S$113 billion), rebuffing an attempt by US President Donald Trump's administration to block the deal and likely setting off a wave of corporate mergers.
The deal, which could close next week, is seen as a turning point for a media industry that has been upended by companies like Netflix and Alphabet's Google, which produce content and sell it online directly to consumers without requiring a pricey cable subscription.
Cable, satellite and wireless carriers all see buying content companies as a way to add revenue.
Mr Trump, a frequent detractor of Time Warner's CNN and its coverage, denounced the deal when it was announced in October 2016.
US District Judge Richard Leon found little to support the government's arguments that the deal would harm consumers, calling one position "gossamer thin" and another "poppycock".
The ruling could also prompt a cascade of pay TV companies buying television and movie makers, with Comcast Corp's bid for some Twenty-First Century Fox assets potentially the first out of the gate.
The merger, including debt, would be the fourth-largest deal ever attempted in the global telecoms, media and entertainment space, according to Thomson Reuters data. It would also be the 12th largest deal in any sector, the data showed.
In a scathing opinion, Judge Leon concluded that the government had failed to show competitive harm and urged the US government not to seek a stay of his ruling pending a potential appeal, saying it would be "manifestly unjust" to do so and not likely to succeed.
"That's a legal shocker," said Mr J.B. Heaton, an attorney and consultant on litigation and regulatory proceedings. "I think we'll see now that companies will be much more confident about vertical mergers," he added, referring to deals where a company merges with a supplier.
"This will be a blockbuster summer for media mergers," said Ms Mary Ann Halford, senior adviser to OC&C Strategy Consultants.
Opponents of the AT&T decision also predicted more deals.
"Consumers should fear a cascade of unchecked mergers and acquisitions to further consolidate the telecoms industry, resulting in less choice, fewer competitors and higher prices," Senator Richard Blumenthal, a Democrat, said in a statement.
The Justice Department filed a lawsuit to stop the deal in November last year, saying AT&T's ownership of both DirecTV and Time Warner would give it unfair leverage against rival cable providers that relied on Time Warner's content, such as CNN and HBO's Game Of Thrones.
Leaving the courtroom, head of the Justice Department's antitrust division Makan Delrahim said he would read the judge's opinion before making a decision on an appeal.
Cornell law professor George Hay added that the ruling found the government's evidence lacking, rather than a broader determination of how vertical mergers affected competition.