The AT&T (T) - Get Report   and Time Warner  (TWX) ruling is reverberating throughout media and telecom after hours.

Judge Richard Leon cleared AT&T's purchase of Time Warner for $85.4 billion, or $108.7 billion including debt, after the market close on Tuesday.

Shares of AT&T are down about 1.6% to $33.78 after hours. Time Warner gained $4.9% to $100.96. 

AT&T and Time Warner argued that the government rarely blocks vertical mergers that do not remove a competitor from the market. Vertical deals theoretically can lead to lower prices if the merger partners can lower their costs while maintaining the same field of competitors. 

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Comcast (CMCSA) - Get Report hoped that Leon would clear the merger, so that it could launch a bid for Fox (FOXA) - Get Report .

Disney (DIS) - Get Report agreed to buy most of Fox's film, television and pay-television distribution assets in December for $52.4 billion, or more than $66 billion including assumed debt, over a deal with Comcast. Rupert Murdoch was not comfortable selling the business to Comcast after the government sued to block AT&T's purchase of Time Warner.

Comcast and AT&T both own pay-TV distribution systems. If the cable group were to acquire Fox's media businesses, Murdoch feared, the deal could encounter the same resistance to vertical consolidation that caused Justice to sue AT&T and Time Warner.

Department of Justice anti-trust chief Makan Delrahim suggested that Disney's purchase of Fox could work at The Deal's Corporate Governance conference in June. "They, I think, had good advice and carved out surgically what a transaction that might be doable, and again, who knows where that transaction leads," Delrahim said at the event.

Comcast dropped 3.5% to $31.25 after hours on the prospect of a bidding war. Fox gained 4.8% to $42.50 while Disney dropped 1.75% to $102.50.

Leon's ruling also has implications for pharmacy chain CVS's (CVS) - Get Report purchase of health insurer Aetna (AET) $69 billion, or $77 billion including assumed debt.

Like AT&T-Time Warner, the combination represents vertical consolidation. 

CVS rose 0.5% to $67.10 after hours, and Aetna gained 2.9% to $186.00.

The order has limited implications for Sprint (S) - Get Report and T-Mobile (TMUS) - Get Report , who plan their own mega-merger.

Unlike AT&T's vertical merger with Time Warner, the combination of Sprint and T-Mobile is a vertical merger that would remove a national wireless carrier from the market.

The Department of Justice based its lawsuit against the AT&T and Time Warner on the potential increase in cable bills. A merger that would reduce the field of wireless competitors could trigger an increase in wireless prices. However, Delrahim has Suggested that a reduction from four wireless carriers to three is not necessarily verboten. "I just said I am not smart enough to figure out any magical number in any market," Delrahim said at The Deal's conference.

Sprint rose 3% to $5.46 after the market close. T-Mobile dropped 0.1% to $58.30.

AT&T and Time Warner argue that they will actually reduce cable bills. The companies plan to use data from AT&T's wireless, satellite and cable television subscribers to sell targeted advertising on the Turner networks, which include CNN, TBS and TNT.

In court testimony, AT&T Chairman and CEO Randall Stephenson compared the post-merger company to Facebook (FB) - Get Report and Alphabet  (GOOGL) - Get Report , which have used personal data to dominate digital advertising. AT&T can sell the targeted ads for 3 to 5 times the amount it gets for a traditional television spot. 

A merged AT&T and Time Warner could also borrow from the playbooks of Netflix (NFLX) - Get Report and Amazon (AMZN) - Get Report , by using data about popular programs, films and actors to tailor their productions, Stephenson testified.

Facebook was flat at $192.40 after hours, while Alphabet was stable at $1,148.19.

Netflix dropped about 0.1% to $363.40, and Amazon dropped 0.2% to $1,695.86.

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