AT&T Inc has won approval from a US court to buy Time Warner Inc for $US85 billion ($A112 billion), dealing a blow to President Donald Trump's move to block the deal and likely setting off a wave of corporate mergers.
The planned deal, approved without conditions on Tuesday, is seen as a turning point for a media industry upended by companies like Netflix and Google which produce content and sell it online without requiring a pricey cable subscription.
Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.
The decision comes despite criticism from Trump, a frequent detractor of Time Warner's CNN and its coverage. The deal was announced in October 2016 and quickly denounced by him.
The ruling could also prompt a cascade of pay TV companies buying television and movie makers, with Comcast Corp's bid for some Twenty-First Century Fox Inc assets potentially the first out of the gate.
The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data.
It would also be the 12th largest deal in any sector.
"I conclude that the government has failed to meet its burden of proof," District Court Judge Richard Leon told the court. He called one of the government's arguments against the deal "gossamer thin".
The judge in a scathing opinion urged the US government not to seek a stay of his ruling, saying it would be "manifestly unjust" and unlikely to succeed.
Shares of AT&T fell about 1.3 per cent in after-hours trade following the decision, while Time Warner rose more than 5 per cent. Comcast was down 3 per cent.
"The court is the last place you want to accomplish your M&A goal but in this case it was a sweet victory," said Jeffrey Logsdon of JBL Advisors in California.
"This will be a blockbuster summer for media mergers!" said Mary Ann Halford at OC&C Strategy Consultants.
The Justice Department filed a lawsuit to stop the deal in November 2017, saying AT&T's ownership of both DirecTV and Time Warner would give AT&T unfair leverage against rival cable providers that relied on Time Warner's content, such as CNN and HBO's Game of Thrones.
Leaving the courtroom, Makan Delrahim, head of the Justice department's antitrust division, said he would read the judge's opinion before making a decision on an appeal.
Asked about the decision, he said, "obviously we don't agree".
AT&T in a six-week trial argued the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook Inc and Alphabet Inc's Google already do.
The government estimated costs to industry rivals, such as Charter Communications Inc, would increase by $US580 million a year if AT&T owned Time Warner.
To assuage the Trump administration's criticisms, AT&T offered to submit pricing disagreements with other pay TV companies over Turner's channels to third-party arbitration.
