Disney's offer to buy 21st Century Fox. CVS' bid for Aetna. T-Mobile's proposed merger with Sprint.
The path for these blockbuster deals and others could be transformed in an instant Tuesday, when a federal judge is expected to issue his opinion on the government's effort to block AT&T's merger with Time Warner. It is one of the most influential antitrust cases in decades, enthralling Hollywood, Silicon Valley and Madison Avenue.
If the merger is blocked, some executives are likely to slim down their deal aspirations. If the deal ends up going through, expect a cascade of mergers and acquisitions.
"It could have a collateral effect on every other transaction," said Blair Levin, an adviser to New Street Research and a former chief of staff at the Federal Communications Commission.
The Justice Department suit to stop AT&T from buying Time Warner, an $85.4 billion deal, surprised investors and antitrust experts when it was filed late last year. The two companies are in related industries but do not produce competing products — one makes media content, and the other distributes it. Deals between such companies, called vertical mergers, typically pass regulatory scrutiny with minimal roadblocks.
During a six-week trial at the U.S. District Court in Washington, the Justice Department argued that the merger would hurt consumers because the combined company could have the power to raise prices and squash upstart rivals. AT&T and Time Warner said the deal was necessary to compete with fast-growing streaming video giants like Netflix and Amazon.
The case will be decided by Richard Leon, a plain-spoken judge appointed by President George W. Bush. He is expected to give a shortened version of his opinion in remarks around 4 p.m. Tuesday. The full opinion, released around the same time, could be more than 200 pages and will be closely read.
Although Leon has given few clues about his thinking, many analysts expect the companies to prevail because of the history of similar cases that were approved. Some have also said the government struggled in the trial to show that the deal would cause substantial harm.
But the decision may not be clear cut. The judge may allow the merger with several conditions, such as restrictions on how AT&T negotiates with rival cable companies that want to run Time Warner content.
"Anything is possible, and the reality is that any side that loses will be appealing," said Rich Greenfield, an analyst at BTIG Research.
What could happen
Here are some potential implications of the three general outcomes.
If Leon clears the way for the merger without any restrictions, expect other companies to see it as a green light for more consolidation.
Companies pursuing vertical deals, like CVS and its $69 billion acquisition of Aetna, will point to the court decision to support their case with regulators. The same goes for another health care deal, Cigna's $52 billion offer for the drug benefits manager Express Scripts.
More upheaval in the media industry is also likely. Comcast has signaled that if the deal goes through, it will make a bid for the 21st Century Fox parts that the Walt Disney Co. is in the process of acquiring for $52.4 billion in stock. Comcast, which was rebuffed by the Fox board in the fall, largely because of regulatory concerns, said on May 23 that it was preparing a "superior all-cash offer" for the Fox assets.
"We expect a Comcast bid for Fox under almost any circumstance, unless there is problematic language in the AT&T-Time Warner court decision that makes the prospect of vertical media mergers untenable going forward," Greenfield of BTIG Research wrote Wednesday.
A government win could encourage the department to act more aggressively on similar deals.
Makan Delrahim, antitrust chief for Justice, has been adamant that competitive concerns in mergers cannot be resolved through promises to hold back on certain anti-competitive practices.