Media stocks are rising after a federal judge ruled in AT&T's favor on its deal to acquire Time Warner.
U.S. District Court Judge Richard Leon ruled Tuesday that AT&T could buy Time Warner with no conditions attached, denying a Department of Justice antitrust challenge.
Time Warner shares were up 2 percent and CBS shares rose more than 3 percent Wednesday, while 21st Century Fox was up more than 6 percent. Netflix also rallied nearly 5 percent.
"TV content stocks [are] surging, post-close, on expectations of a merger wave that we see as sensible—but not without risk," B. Riley analyst Barton Crockett said in a note to clients Wednesday.
Jefferies told clients the ruling may lead to more mergers moves because it raises the perception of a "more lenient regulatory environment" for acquisitions.
"M&A activity across the media and telecommunications landscape has largely been in a holding pattern awaiting the outcome of the T/TWX deal," Jefferies analyst John Janedis said Tuesday. "With the deal approved we think it could spur other M&A activity for the group."