• by Wendy Davis  @wendyndavis, June 12, 2018

A federal judge ruled Tuesday afternoon that AT&T can proceed with its $85 billion acquisition of Time Warner.

The 172-page ruling, issued by U.S. District Court Judge Richard Leon in Washington, D.C., comes seven months after the Department of Justice sued to block the deal on the grounds that it would decrease competition and result in higher prices for consumers. The Justice Department contended that the deal -- which brings cable companies including CNN and HBO into AT&T's fold -- would enable the telecom to harm competitors -- including online distributors -- by withholding (or demanding excessive fees) for popular channels.

AT&T countered in court papers that the merger would allow it to compete better with Netflix, Amazon, Google and other companies that offer online video. "AT&T is merging with Time Warner not to thwart online viewing, but to advance it, by enabling AT&T to introduce new video products better suited to mobile viewing," the company argued in papers filed with Leon this spring. 

The company also argued that the merger would enable it to combine data about users with Time Warner's ad inventory to build "an industry-wide, fully-automated advertising platform directly opposite Google and Facebook."

The decision is expected to encourage other media industry mergers. 

Consumer advocacy groups denounced the ruling, arguing that it could enable AT&T to thwart competition from online video distributors -- especially now that the Obama-era net neutrality rules have been repealed. Those rules would have prevented AT&T from blocking or throttling content, and from charging higher fees for prioritized delivery.

"Now, more than ever, we need reinvigorated regulatory oversight of the video marketplace -- such as program access and program carriage rules -- to ensure that smaller distributors and programmers, and consumers, aren’t harmed by an increasingly uncompetitive market," the advocacy group Public Knowledge said in a statement. "Additionally, the harms this deal will cause demonstrate why broadband users need strong, enforceable net neutrality rules on the books."

Free Press Policy Director Matt Wood added that AT&T will now "be able to surveil its customers across the entire internet and target ads to them in ways that even Google and Facebook would be hard-pressed to match."

Some lawmakers also criticized the ruling. Senator Amy Klobuchar (D-Minnesota) said the decision "raises serious concerns for consumers and the future of American media, and also sends a troubling signal to others that it’s open season for vertical mergers."

Senator Ed Markey (D-Massachusetts) added that without net neutrality protections, "AT&T will be free to block, slowdown, or charge fees to competitors like Netflix and Hulu to favor their own DirecTV Now streaming service and HBO content."

It's not yet known whether the Justice Department will appeal. But Leon took the unusual step of urging the government to avoid asking for an injunction that could prevent the merger from occurring while any appeal is pending.

"The government here has taken its best shot to block the merger based on the law and facts, and within the time allowed. The defendants did their best to oppose it," he wrote. "The Court has spoken."

He added that a stay pending appeal "would cause certain irreparable harm" to AT&T, which is contractually obligated to complete the purchase by June 21.

AT&T stated on Tuesday that it hopes to complete the purchase by June 20.