AT&T wins US court approval to buy Time Warner for $85 billion

WASHINGTON, June 12 (Reuters) - AT&T Inc won approval from a U.S. court on Tuesday to buy Time Warner Inc for $85 billion, allowing AT&T to compete with internet companies that dominate digital advertising and providing new sources of revenue.

The planned deal is seen as a turning point for a media industry that has been upended by companies like Netflix Inc and Google which produce content and sell it online directly to consumers, without requiring a pricey cable subscription. Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.

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 Inc assets potentially the first out of the gate.

RELATED: AT&T CEO Randall Stephenson through the years

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AT&T CEO Randall Stephenson through the years
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AT&T CEO Randall Stephenson through the years
Chief Executive Officer of AT&T Randall Stephenson testifies before the Senate Judiciary Committee Antitrust Subcommittee during a hearing on the proposed deal between AT&T and Time Warner in Washington, U.S., December 7, 2016. REUTERS/Joshua Roberts
Chief Executive Officer of AT&T Randall Stephenson (L) and Chairman and Chief Executive Officer of Time Warner Jeffrey Bewkes listen to testimony before the Senate Judiciary Committee Antitrust Subcommittee hearing on the proposed deal between AT&T and Time Warner in Washington, U.S., December 7, 2016. REUTERS/Joshua Roberts
Chief Executive Officer of AT&T Randall Stephenson (L) and Chairman and Chief Executive Officer of Time Warner Jeffrey Bewkes testify before the Senate Judiciary Committee Antitrust Subcommittee hearing on the proposed deal between AT&T and Time Warner in Washington, U.S., December 7, 2016. REUTERS/Joshua Roberts
Randall Stephenson, chairman and chief executive officer of AT&T Inc., from left, speaks while Jeffrey 'Jeff' Bewkes, chairman and chief executive officer of Time Warner Inc., listens during a Senate Judiciary Subcommittee hearing in Washington, D.C., U.S., on Wednesday, Dec. 7, 2016. Stephenson told Congress his company's planned $85.4 billion purchase of HBO and CNN owner Time Warner Inc. will help the telecommunications provider challenge cable companies for customers. Photographer: Andrew Harrer/Bloomberg via Getty Images
Chairman and Chief Executive Officer of AT&T Randall Stephenson (L), Chairman and Chief Executive Officer of Time Warner Jeffrey Bewkes (C) and Chairman of AXS TV and owner of the Dallas Mavericks Mark Cuban are sworn in before a Senate Judiciary Committee Antitrust Subcommittee hearing on the proposed deal between AT&T and Time Warner in Washington, U.S., December 7, 2016. REUTERS/Joshua Roberts TPX IMAGES OF THE DAY
Randall Stephenson, chairman and chief executive officer of AT&T Inc., swears into a Senate Judiciary Subcommittee hearing in Washington, D.C., U.S., on Wednesday, Dec. 7, 2016. AT&T Inc. Stephenson told Congress his company's planned $85.4 billion purchase of HBO and CNN owner Time Warner Inc. will help the telecommunications provider challenge cable companies for customers. Photographer: Andrew Harrer/Bloomberg via Getty Images
Chief Executive Officer of AT&T Randall Stephenson (L) speaks as Chairman and Chief Executive Officer of Time Warner Jeffrey Bewkes listens during testimony before the Senate Judiciary Committee Antitrust Subcommittee hearing on the proposed deal between AT&T and Time Warner in Washington, U.S., December 7, 2016. REUTERS/Joshua Roberts
Randall Stephenson, chairman and chief executive officer of AT&T Inc., speaks during a Senate Judiciary Subcommittee hearing in Washington, D.C., U.S., on Wednesday, Dec. 7, 2016. Stephenson told Congress his company's planned $85.4 billion purchase of HBO and CNN owner Time Warner Inc. will help the telecommunications provider challenge cable companies for customers. Photographer: Andrew Harrer/Bloomberg via Getty Images
U.S. President Donald Trump (C), flanked by AT&T CEO Randall Stephenson (L) and Trumbull Unmanned CEO Dyan Gibbens (R), holds an event highlighting emerging technologies, in the East Room at the White House in Washington, U.S., June 22, 2017. REUTERS/Jonathan Ernst
U.S. President Donald Trump (C), flanked by New Enterprise Associates (NEA) Managing General Partner Peter Barris, AT&T CEO Randall Stephenson, Trumbull Unmanned CEO Dyan Gibbens, Honeywell President Darius Adamczyk and White House National Economic Council Director Gary Cohn, holds an event highlighting emerging technologies, in the East Room at the White House in Washington, U.S., June 22, 2017. REUTERS/Jonathan Ernst
U.S. President Donald Trump greets AT&T CEO Randall Stephenson (C) as he arrives for an event highlighting emerging technologies, in the East Room at the White House in Washington, U.S., June 22, 2017. REUTERS/Jonathan Ernst
AT&T CEO Randall Stephenson shows U.S. President Donald Trump a model of how his company plans to install 5G networks in urban settings during in an event highlighting emerging technologies, in the East Room at the White House in Washington, U.S., June 22, 2017. REUTERS/Jonathan Ernst
AT&T CEO Randall Stephenson shows U.S. President Donald Trump a model of how his company plans to install 5G networks in urban settings during in an event highlighting emerging technologies, in the East Room at the White House in Washington, U.S., June 22, 2017. REUTERS/Jonathan Ernst
AT&T's Randall Stephenson (L) speaks as U.S. President Donald Trump meets with technology and telecommunications executives at the White House in Washington, U.S., June 20, 2017. REUTERS/Jonathan Ernst
BEVERLY HILLS, CA - OCTOBER 04: Chairman and CEO of AT&T Randall Stephenson speaks onstage during Vanity Fair New Establishment Summit at Wallis Annenberg Center for the Performing Arts on October 4, 2017 in Beverly Hills, California. (Photo by Matt Winkelmeyer/Getty Images)
BEVERLY HILLS, CA - OCTOBER 04: Chairman and CEO of AT&T Randall Stephenson and Deputy Editor Stephanie Mehta speak onstage during Vanity Fair New Establishment Summit at Wallis Annenberg Center for the Performing Arts on October 4, 2017 in Beverly Hills, California. (Photo by Matt Winkelmeyer/Getty Images)
Randall Stephenson, chairman and chief executive officer of AT&T Inc., speaks during the International Business Machines Corp. (IBM) InterConnect 2017 conference in Las Vegas, Nevada, U.S., on Tuesday, March 21, 2017. IBM InterConnect brings together industry leaders with sessions dedicated to the education and development skills needed to elevate businesses with cloud computing. Photographer: David Becker/Bloomberg via Getty Images
Randall Stephenson, chairman and chief executive officer of AT&T Inc., left, speaks as Ginni Rometty, chief executive officer of International Business Machines Corp. (IBM), smiles during the IBM InterConnect 2017 conference in Las Vegas, Nevada, U.S., on Tuesday, March 21, 2017. IBM InterConnect brings together industry leaders with sessions dedicated to the education and development skills needed to elevate businesses with cloud computing. Photographer: David Becker/Bloomberg via Getty Images
Randall Stephenson, chairman and chief executive officer of AT&T Inc., reacts during a Bloomberg Television interview at the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 18, 2017. World leaders, influential executives, bankers and policy makers attend the 47th annual meeting of the World Economic Forum in Davos from Jan. 17 - 20. Photographer: Simon Dawson/Bloomberg via Getty Images
Randall Stephenson, chairman and chief executive officer of AT&T Inc., right, stands in an elevator at Trump Tower in New York, U.S., on Thursday, Jan. 12, 2017. Donald Trump is slated to meet with AT&T Inc.'s top executives on Thursday to discuss the company's proposed $85.4 billion bid for Time Warner Inc., according to people familiar with the matter. The president-elect has said he opposes the deal. Photographer: John Taggart/Bloomberg via Getty Images
Randall Stephenson, chairman and chief executive officer of AT&T Inc., arrives at Trump Tower in New York, U.S., on Thursday, Jan. 12, 2017. Donald Trump is slated to meet with AT&T Inc.'s top executives on Thursday to discuss the company's proposed $85.4 billion bid for Time Warner Inc., according to people familiar with the matter. The president-elect has said he opposes the deal. Photographer: John Taggart/Bloomberg via Getty Images
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The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data. It would also be the 12th largest deal in any sector, the data showed.

The Justice Department filed a lawsuit to stop the deal in November 2017, saying that AT&T's ownership of both DirecTV and Time Warner would give AT&T unfair leverage against rival cable providers that relied on Time Warner's content, such as CNN and HBO's "Game of Thrones."

AT&T in a six-week trial argued that the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook Inc and Alphabet Inc's Google already do.

AT&T and other wireless carriers need to find new sources of revenue as the mobile phone market stagnates and more customers abandon pricey cable and satellite packages for streaming services they can watch on their phones or televisions.

The government estimated costs to industry rivals, such as Charter Communications Inc, would increase by $580 million a year if AT&T owned Time Warner.

To assuage the Trump administration's criticisms, AT&T offered to submit pricing disagreements with other pay TV companies over Turner's channels to third-party arbitration. The companies further offered not to black out programming during arbitration for seven years.

Announced in October 2016, the deal was quickly denounced by Donald Trump, who as a candidate and later as president has been critical of Time Warner's CNN and its coverage.

Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge Richard Leon of the U.S. District Court for the District of Columbia rejected their bid to force the disclosure of White House communications that might have shed light on the matter.

The deal cost AT&T's top lobbyist, Bob Quinn, his job in May after it became public that AT&T had paid Trump's personal lawyer Michael Cohen $600,000 for advice on winning approval.

The ruling could also have implications for CBS Corp's potential tie-up with Viacom Inc, which is already uncertain because of a lawsuit between CBS's controlling shareholder, Shari Redstone, and its board.

(Reporting by Diane Bartz and David Shepardson; Additional reporting by Ginger Gibson in Washington and Sheila Dang in New York; Writing by Peter Henderson; Editing by Lisa Shumaker)

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