Appeals Court Backs Time Warner AT&T Merger

In a unanimous ruling, the three-judge appellate panel said the government's case failed to consider that the industry had become "dynamic in recent years" with the emergence of online services such as Netflix and Hulu. It is unclear if the government will try to take the case to the Supreme Court.

The US$85 billion deal would bring together AT&T's wireless and broadband networks and its DirecTV subscription service with the media assets of Time Warner, which include CNN and other Turner cable channels, the Cartoon Network, premium channel HBO and the Warner Bros movie studio.

The government brought the antitrust case, claiming the deal would give AT&T too much power in the market for pay television and home entertainment.

But US District Judge Richard Leon ruled last year that the government had failed to show the deal would harm competition.

The appellate court opinion affirmed that decision, saying the industry is undergoing widespread changes led by on-demand video services and rivals offering small packages of channels - known as "skinny bundles".

The appeals court also rejected claims that the lower court misunderstood and misapplied economic arguments in the case. (AFP)