"The impact from this decision will have wide-reaching ramifications across the telecommunications, media, and tech industry for decades to come", said GBH Insights analyst Dan Ives.
The Justice Department, which may still appeal the decision, sued the companies in November, arguing that the tie-up could be used to suppress competition and raise prices for consumers. But Comcast has said it's prepped to top Disney's bid for the 21CF assets - and it's widely expected that Comcast will pull the trigger now that the AT&T-Time Warner merger has the go-ahead.
Leon said the government's theory that the merger would give the combined company too much leverage in programming negotiations was "plagued by inconsistencies" and contradicted by the Justice Department's own evidence. Stephenson said Watch would only be possible if the merger went through.
"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.
AT&T and Time Warner's lead lawyer, Daniel Petrocelli, said outside court that the companies were gratified and relieved.
A vertical merger is when two companies who provide different or complementary offerings join forces, giving consumers access to a more comprehensive set of services, at a lower price, while still generating profits. At a campaign rally in 2016, Trump said his administration would not approve the deal, raising concerns over political interference.
AT&T said that controlling Time Warner's cable brands will help it craft new types of content to retain its customers as web-based rivals like Netflix Inc woo audiences away from traditional pay-TV subscriptions. 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.
Those comments and his repeated criticism of CNN, which is owned by Time Warner's unit Turner Broadcasting, raised speculation that Trump had pushed Delrahim and the Justice Department to block the deal.
His position, which the White House said it supported, also drew accolades from left-leaning politicians and antitrust experts. The ruling could open the floodgates to deal-making in the fast-changing entertainment and video-content worlds. Looming in the background of the deal has been Trump's long-running feud with Time Warner's CNN, which he has often derided as "failing" and a purveyor of "fake news".
The government argued that AT&T would gain outsize market power, jacking up the prices it charges cable providers to carry networks in the Time Warner stable.
The judge rejected the government's argument that the merger would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.