US appeals court clears AT&T's $81B purchase of Time Warner

WASHINGTON (AP) — A federal appeals court today cleared AT&T's takeover of Time Warner, rejecting the Trump administration's claims the $81 billion deal will harm consumers and reduce competition in the TV industry.

The ruling by the U.S. Court of Appeals in Washington came in the high-stakes competition case, approving one of the biggest media marriages ever. It was already completed last spring, soon after a federal trial judge approved it. AT&T, a wireless carrier and TV and home internet provider, absorbed Time Warner, the owner of CNN, HBO, the Warner Bros. movie studio, "Game of Thrones," coveted sports programming and other "must-see" shows.

Many observers had expected the decision favorable to AT&T from the three-judge appeals court panel, which upheld the trial judge's June ruling. Opposing the merger forced the Justice Department to argue against standing legal doctrine that favors mergers among companies that don't compete directly with each other, what's known as a vertical merger.

The U.S. antitrust lawsuit against Dallas-based AT&T marked the first time in decades the government has challenged that doctrine by suing to block a vertical merger.

The appeals court judges said U.S. District Judge Richard Leon was correct to dismiss the government's argument that AT&T's takeover of Time Warner would hurt competition, limit choices and jack up prices for consumers to watch TV and movies.

The Justice Department antitrust attorneys had asserted that Leon misunderstood the complexities of the TV industry and the nature of AT&T's competitors.

The idea behind the merger was to help AT&T – which claims about 25 million of the 90 million U.S. households that are pay TV customers – compete better with online rivals like Netflix, YouTube and Hulu.

AT&T already had a streaming service, DirecTV Now, but it launched a cheaper offering called WatchTV soon after the deal closed. It's planning another streaming service, "WarnerMedia," for later this year.

The case could affect the future antitrust regulation.