Instead, a rush to consolidate is likely.
For this reason, the government was hoping that Leon would at least put conditions on the merger, like requiring the telecom to sell off some of Time Warner's most coveted properties.
Other media stocks that saw big price moves after the judge's ruling was announced included 21 Century Fox (FOX), whose shares were up almost 5 percent on speculation it could be the subject of a bidding war between Disney (DIS), which already has a $52 billion all-stock deal for Fox on the table, and a media giant like Comcast (CMCSA), which in recent weeks has been hinting of its intention to make an even larger all-cash bid for Fox.
Leon's ruling could shape the government's future competition policy. But, he added, "the government's evidence is too thin a reed for this court to rely on".
The judge made his remarks to a packed courtroom in an unusual session weeks after the trial ended.
Beyond the impact on the two companies, the merger is expected to spur frantic dealmaking in the rapidly consolidating media sector.
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.
For cable companies feeling the pain of cord-cutting, similar deals for coveted media brands could help them build out new content offerings and offset expected declines in revenues, analysts and dealmakers told Reuters. Even if a company doesn't need to get bigger right away, it might need to do so to prevent a competitor from overshadowing it.
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.
But some experts urged caution in thinking that the DOJ's top antitrust official Makan Delrahim would allow a Comcast-Fox deal to go through unopposed. AT&T's favorable ruling would seem to clear any regulatory hesitation.
At the heart of the DOJ's complaint is an assumption that the merged entity would use its market power to raise the price of content now owned by Time Warner, or threaten to withhold programming, including hit shows such as Game of Thrones and NCAA March Madness.
Bloomberg via Getty Images AT&T CEO and Chairman Randall Stephenson exits federal court in April.
Updated 2:18 pm PT: This story was updated with comments from AT&T and the Justice Department.
The U.S. Department of Justice has lost its antitrust lawsuit to bar the planned AT&T and Time Warner merger, according to Business Insider.
"The court has spoken", U.S. District Judge Richard Leon said.
AT&T refused to divest assets and the Justice Department sued to block the deal in November.