Makan Delrahim, the antitrust chief of the DOJ, said in a statement that he and his staff are "disappointed" but will "closely review the Court's opinion and consider next steps", leaving the door open for an appeal of the ruling. It would be a notable moment if the high court's justices decide to take the case, since the Supreme Court has not taken up a merger case since the 1970s.
The acquisition will create one of the most powerful companies in global media, marrying AT&T's widespread consumer distribution capabilities with the crown jewels of Time Warner, including HBO, Warner Bros. film and TV studios, and TV channels including CNN, TNT and TBS. The Justice Department can still appeal Leon's decision. "AT&T and Time Warner concluded that each had a problem the other could solve", he wrote. Specifically, he said the government did not show how Turner would have any more leverage with carriers as part of AT&T, nor did they show that AT&T would get an unfair advantage over other carriers.
Leon - who presided over the Justice Department's suit against Comcast's acquisition of NBCUniversal that was settled with a consent decree - signaled his time table to announce his decision on AT&T for Tuesday at 4 p.m., giving the company and the Justice Department time to settle the case.
The government estimated costs to industry rivals, such as Charter Communications Inc, would increase by $580 million a year if AT&T owned Time Warner.
Leon said the government failed to prove that the merger would lead to higher prices and other ham to consumers. Under this scenario, Leon would have to find that the US failed to show that the combination would likely reduce competition. In doing so, Leon also removed the last major hurdle for the deal to go through.
The ruling suggests Judge Leon is adapting to the times.
The approval of AT&T and Time Warner's merger works in Comcast's favor, spurring it to finalize its all-cash offer, which is said to be in the "advanced stages".
In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.
Months before Trump nominated him to the Justice Department's leading antitrust position in 2017, Delrahim even had expressed an openness to the combination of AT&T and Time Warner, predicting in an interview on Canadian television that it might not trigger any regulatory concerns. The new bid from Comcast is expected to be made within the next 24 to 48 hours, potentially spelling trouble for the Mouse House. That same day, Trump, then a candidate for president, pledged that his administration would block the deal.
Originally it was said that AT&T had planned to launch AT&T Watch no matter what happens with the current Time Warner DOJ court case. While Judge Richard Leon could approve or block the merger outright, he also has another option: allow the tie-up with changes to protect AT&T rivals that buy Time Warner programming.
Government lawyers had argued that the takeover would hurt innovation and allow AT&T to charge rival providers more for its must-have content - costs that would ultimately be passed on to consumers. The Federal Trade Commission, which shares antitrust jurisdiction with the Justice Department, has won only half of the emergency orders it has sought since 2004, according to Bloomberg Intelligence.
"The case stands as a testament to the wisdom of this combination of these two great companies, and how it will benefit consumers for generations to come", Petrocelli told reporters afterward.
- CNN's David Goldman contributed reporting.