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The bigger picture: How AT&T's win shapes a wave of new deals

Illustration: Sarah Grillo, Caresse Haaser/Axios

AT&T's victory over the Department of Justice Tuesday in a landmark case over its purchase of Time Warner is expected to usher in a period of industry consolidation — particularly between media, tech and telecom companies.

Why it matters: Hundreds of billions of dollars worth of potential deals were at stake pending this decision. Now, there's more clarity around what the corporate landscape might start to look like.

The first thing to expect is a fight between Comcast and Disney over 21st Century Fox's entertainment assets — like FX, National Geographic and its movie studios. Multiple reports suggest that Comcast was delaying a new bid for Fox until a decision came down in the AT&T and Time Warner case, since the deals were so similar.

  • Many analysts agree that Comcast is likely to submit an all-cash bid for Fox — for the same assets that Disney is seeking to acquire — within the next day or so.
  • “Look for a premium to Disney’s bid for Fox of at least 25% and it could be 30% (Comcast may also have a financial or strategic partner),“ says BTIG media analyst Rich Greenfield. (Fox initially rejected a higher bid from Comcast last fall due to regulatory concerns pertaining to the outcome of the AT&T trial.)
  • Greenfield and others have suggested that Fox has the incentive to take the highest bid possible that will pass regulatory approval — whether that be from Disney, Comcast or someone else.

Next, Disney is expected to issue its own counter offer. Disney could wait to counter until regulators in Europe approve a different international media deal — Comcast's bid for Sky Broadcasting in Europe.

  • Ironically, Fox is also trying to buy parts of Sky, and regulators just approved the deal barring a few divestitures. But approval of Comcast's bid could change the dynamics between Fox and Disney's deal, since that transaction includes a stake in the broadcaster.

Last, expect the ruling to put more attention on both similarly-structured vertical mergers — deals between companies in different markets — and horizontal mergers, deals between companies in the same market. Some of the big pending deals include:

  • T-Mobile U.S. and Sprint have agreed to merge to form a $146 billion company that it says could take on larger rivals in the cellphone business.
  • CVS Health agreed to buy Aetna last year for $69 billion in cash and stock to create a new pharmaceutical and insurance behemoth.
  • Cigna reached a deal to buy Express Scripts for $52 billion earlier this year to compete with other vertically-integrated health care companies, like a potential CVS Health and Aetna combination.
  • There are already signs that companies with deals under review are reacting to the AT&T-Time Warner ruling. The Washington Post reported on Tuesday that it will become part of T-Mobile and Sprint's pitch to antitrust regulators.

The bigger picture: This deal's successful passage through the regulatory mill doesn't guarantee that every similarly structured deal will meet the same fate. Judge Richard J. Leon said, at the end of his 172-page opinion, that “the temptation by some to view this decision as being something more than a resolution of this specific case should be resisted by one and all!”

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