AT&T (T) Sinks, Time Warner (TWX) Gains As Federal Judge Approves Merger

A federal judge has approved AT&T’s (NYSE:T) $85 billion merger with Time Warner (NYSE:TWX) , handing the telecom giant a massive victory in what has been the most intense antitrust case in decades.

Shares of AT&T sunk in after-hours trading shortly after the news, while Time Warner stock added as much as 4.5%. The judge’s decision will apparently allow AT&T to buy Time Warner without any significant conditions.

Analysts have said that such a decision might limit the government’s power to restrict mergers in the future, with many pointing to potential tie-ups between CVS (NYSE:CVS) and Aetna (NYSE:T) , or Disney (NYSE:DIS) and 21^st Century Fox (NASDAQ:FOXA) , as deals that could be affected by this precedent.

Judge Richard Leon filed the decision, which will ignite AT&T’s content ambitions and put the company in a better position to battle tech-media hybrids like Netflix (NASDAQ:NFLX) , Amazon (NASDAQ:AMZN) , and Alphabet (NASDAQ:GOOGL) .

Government prosecutors attempted to argue that a combination of AT&T’s distribution network—its cellular and wired broadband infrastructure—and Time Warner’s original content—HBO, Warner Bros., and Turner Broadcasting—would create an anticompetitive environment in today’s evolving communications and media sector.

Now, AT&T will leverage those new properties to create a new telecom-media behemoth.

Initial investor reaction likely reflects hesitation toward the costs associated with the deal, but it is hard to think that the merger does not present exciting potential for AT&T.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>