AT&T Inc. (NYSE: T) got the news it was hoping when U.S. District Court Judge Richard Leon ruled Tuesday that AT&T can complete its $85 billion buyout of Time Warner ( TWX) without restrictions. Analysts say the ruling will serve as a catalyst for AT&T stock and several other large media companies.
In his ruling, Leon says the merger is allowed to go through without AT&T divesting any assets. Leon also discouraged the Department of Justice, which opposed the merger, to seek a stay on the ruling.
[See: 7 Low-Risk ETFs to Protect Your Portfolio.]
“We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative,” AT&T general counsel David McAtee says in a statement.
AT&T stock traded lower by 2 percent on Wednesday morning following the ruling, and Time Warner stock traded higher by 4 percent.
Bank of America analyst David Barden says it’s no surprise to see AT&T setting an aggressive timetable to close the deal. Barden says the negative initial reaction in AT&T stock is also not surprising.
“We expect TWX shareholders may sell their new T holdings, creating a technical overhang for stock performance after which the stock should recover to fundamental levels,” Barden says.
GBH Insights head of technology research Daniel Ives says the ruling will clear the path for AT&T to significantly enhance its streaming video offerings.
“In particular we would expect aggressive bundling of HBO, CNN, and other proprietary sports content from Time Warner into the AT&T network as a key incentive for current and new AT&T wireless customers,” Ives says.
[See: 10 Stocks Hedge Fund Managers Are Betting Against.]
In addition to AT&T investors, Ives says the ruling has major ramifications for Walt Disney Co. ( DIS) and its $52 billion all-stock bid for the TV and movie studio assets of Twenty-First Century Fox, Inc. ( FOXA). Ives expects Comcast Corp. ( CMCSA) to outbid Disney with an all-cash offer for Fox in the range of $60 billion.
CMCSA stock was trading lower by 4 percent on Wednesday morning, while FOXA stock was trading higher by 7 percent.
Bank of America has a “neutral” rating and $37 price target for T stock.
More from U.S. News
7 ETFs You Have No Business Buying
10 ETFs That Pay Sky-High Dividends
The 10 Best Ways to Buy Tech Stocks
AT&T Inc. (T) Ruling Will Upend the Media Landscape originally appeared on usnews.com
