Shares of AT&T were about flat in after-hours trade following the decision, while Time Warner rose more than 5 percent. But if the ruling falls in the Justice Department's favor, a new era of government scrutiny over these types of mergers could freeze further consolidation in the industry.
The DOJ also faced harsher questioning from the judge, who came off exasperated at times during the government's arguments.
He said during the trial that the merger with Time Warner is a "significant shift in strategy" for AT&T, explaining the company knew that smaller acquisitions for content wouldn't work.
"The conventional wisdom is that the government had a steep hill to climb bringing the first vertical-merger case", in over 40 years, Eric Mahr, a former director of litigation at the Department of Justice, told Business Insider.
Prior to the news on the decision in the case, AT&T stock closed up 0.5% (to $34.50 per share) and Time Warner closed up 0.05% in regular trading (to $96.22 per share) which concluded at 4 p.m. ET.
The companies have until June 21 to close the merger, per their previously set deadline.
The decision on a so-called "vertical integration" - between two companies who do not make competing products - could have a profound impact on future mergers.
As a candidate for president, Trump vowed to block the merger, stating it would concentrate too much power in one company.
Dallas-based AT&T's power flows from its position as a wireless, broadband and satellite behemoth that also became the country's biggest pay-TV provider with its purchase of DirecTV.
AT&T has said it needs to buy Time Warner to compete with the likes of Amazon, Netflix and Google in the shape-shifting streaming-TV environment. "The proposed merger would result in fewer innovative offerings and higher bills for American families". The ruling comes one day after the repeal of net neutrality, meaning that AT&T now has more freedom to prioritize the delivery of select content on its network. Comcast, for instance, owns NBCUniversal, and Verizon owns websites including Yahoo and HuffPost.
Analysts say the judge's go-ahead will likely rewrite the rules on how courts apply antitrust laws, paving the way for a number of other potential sales involving names like Comcast, Disney, 21st Century Fox and several other content creation and distribution companies.
Outside of court, however, critics of the lawsuit pointed to Trump's frequent criticism of CNN, which is owned by Time Warner. And Leon's decision is likely to trigger a wave of new mergers, as many executives were waiting to for the outcome of AT&T's bid before pushing forward with their desired deals.
"The government may very well argue that that will increase prices by diminishing choices for consumers", he said. The government failed to prove that the merger would dampen competition and innovation and raise prices for pay TV, said Daniel Petrocelli, the companies' lead attorney in defending the merger.
- E3 2018: New Marvel Spider-Man Footage Shows Some Main Villains
- May narrowly avoids Brexit bill defeat over 'meaningful vote'
- Kim, Trump arrive in Singapore for landmark summit
- Italy prepares Spanish migrant convoy, faces French criticism
- E3 2018: No Fortnite PS4 Cross-Play Across Other Console Platforms
- Trump ‘can’t jump ahead’ in North Korea negotiations: Leon Panetta
- Trump Kim summit: Both leaders are in place
- Tesla's next software update will add fully self-driving features
- Northern light: Macedonia makes name change deal with Greece
- Ronaldo: 'Revelation' Salah can win Ballon d'Or