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All systems appear to be a go for AT&T’s mega $85 billion deal with Time Warner.  A federal judge on Tuesday rejected the U.S. Department of Justice’s bid to block the merger, marking an antitrust decision that paves the way for a potential Comcast-Fox deal.

U.S. District Court Judge Richard Leon read the decision this afternoon and did not impose any conditions on approval of the deal, multiple outlets reported. This gives the greenlight for AT&T absorb major media assets including Turner Broadcasting’s CNN, HBO, the Warner Bros. movie studio.

While analysts expected the DOJ would file an appeal and ask for a stay to stop the transaction from closing ahead of the current June 21 merger termination date, the likeliness of that was dampened as Judge Leon reportedly said he will not grant a stay if requested.

DOJ antitrust chief Makan Delrahim issued a statement about the decision saying, “We are disappointed with the Court’s decision today. We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner.”

Delrahim went on to say the government will closely review the Judge Leon’s decision and “consider the next steps.”

The Justice Department sued last year, citing antitrust concerns that the proposed merger would hurt pay TV competition, and during the six-week trial argued could cost customers up to $500 million annually combined by 2021 due to cable bill hikes.

With Judge Leon handing AT&T and Time Warner court approval for the vertical merger, Comcast is expected to formalize its $60 billion all-cash offer for the entertainment assets of 21st Century Fox within 24 hours, as it seeks to outbid Disney, sources told CNBC.  

With a Fox board meeting scheduled for June 20, BTIG analyst Richard Greenfield said in a Monday blog post that the firm expects the Murdochs, like all shareholders, will continue to be keenly focused on the highest bid for its assets that will pass regulatory approval.

Comcast is pursuing Fox assets that include 21 regional sports networks, cable networks FX and National Geographic, movie and TV production studios and Fox’s 30 percent stake in Hulu.

Greenfield said if Comcast makes its bid official, expect Disney to increase its offer to “at least match if not exceed” Comcast’s shortly after June 15, which is when the EU is expected to approve Comcast as a bidder for British pay TV giant Sky. Disney’s offer is also expected shift from all-stock to a mix of cash and stock.

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