Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge 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.
"This decision from Judge Leon will have broad ramifications for the tech, telecommunications and media sector for decades to come", said Daniel Ives, the chief strategy officer at GBH Insights.
Shares of AT&T fell about 1.3 per cent in after-hours trade following the decision, while Time Warner rose more than 5 per cent. Comcast was down 3 per cent.
AT&T says it plans to move forward with the deal in less than a week, leaving a small window of time for the justice department to file an appeal.
Rival cable company Comcast is now likely to go ahead with its planned attempt to woo Twenty-First Century Fox Inc away from Walt Disney Co, which said it would acquire most assets of the media company for around $50 billion previous year. It could also threaten to withhold content from Time Warner channels, such as CNN, HBO or TNT, from rival services in order to gain a competitive advantage for AT&T's TV services.
Leon said the evidence and testimony provided by the government were faulty and that it never proved the merged entity would have increased leverage over its competitors. It proposed that either AT&T not get Turner in the deal or that it should divest itself of DirecTV prior to acquiring Time Warner. In order for them to compete against these giants, Time Warner needs AT&T's distribution network of broadband and wireless customers. The loss is a black eye for the Justice Department.
As a candidate for president, Trump vowed to block the merger, stating it would concentrate too much power in one company. Comcast, for example, would like to outbid the Walt Disney Co. for some of 21st Century Fox's assets, but has held off until the trial ended.
During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.
As president, Trump has called the merger "not good for the country" and said he believed it would push pay-TV prices higher.
Leon also said it would be harmful for him to put a temporary stay on the merger while the government appeals his decision, if it does so. The government's star witness was Carl Shapiro, an economist at the University of California, who used an economic model to predict that consumer cable bills could rise by $500 million annually in aggregate by 2021.
David McAtee, AT&T's general counsel, said AT&T (T) expected to close the deal by June 20.
Judge Richard Leon said the USA government failed to meet the burden of proof that the tie up between the largest United States pay TV operator and media entertainment giant Time Warner would harm competition. If AT&T and Time Warner win, it will likely be full steam ahead.