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How AT&T–Time Warner Approval Could Shape Other Deals

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Nov. 20 2020, Updated 12:17 p.m. ET

Federal judge approves AT&T–Time Warner deal

The long-awaited $85.4 billion mega-merger between telecommunications behemoth AT&T (T) and media conglomerate Time Warner (TWX) finally got a green light from a federal judge yesterday with no significant conditions. AT&T announced its merger deal with Time Warner in October 2016 but was blocked by the United States Department of Justice (or DoJ) for antitrust reasons.

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Implications of AT&T–Time Warner merger

AT&T’s massive victory against the DoJ pushed up Time Warner stock 4.5% in after-hours trading yesterday shortly after the news broke. AT&T stock fell 2.8% in after-hours trading. The deal is expected to boost Time Warner’s portfolio with media assets and help it diversify amid a declining pay-TV subscriber base. In the first quarter, AT&T lost 188,000 satellite TV customers and added 1,000 U-verse customers.

The AT&T–Time Warner deal could be a turning point for the media industry amid rising digital rivals such as Netflix and Amazon. The approval of the merger could give future corporate media, technology, and entertainment deals a boost. For instance, it might pave the way for potential tie-ups between CVS and Aetna or the Walt Disney Company (DIS) and Twenty-First Century Fox (FOXA).

FOXA stock rose 7.1% in extended trading on June 12 since Comcast (CMCSA) can now start a bidding war with Disney for Fox’s assets. Stocks of Comcast and Walt Disney fell 2.6% and 1.5%, respectively, in after-hours trading after the news. Shares of media and telecommunications companies T-Mobile, Sprint, CBS, Dish Network, and Viacom rose 2.1%, 3.6%, 5%, 2.1%, and 4.1%, respectively, in extended trading.

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