DOJ sues to challenge AT&T-Time Warner merger


The Department of Justice is suing to block AT&T's pending acquisition of Time Warner, saying the $85 billion deal would concentrate too much power in one company.

The Justice Department said it plans to make a major antitrust announcement Monday afternoon, without specifying the topic.

Earlier this month it was reported that Justice Department officials had demanded that AT&T sell off CNN's parent company from Time Warner as a condition for regulatory approval, raising questions about whether President Trump was intervening in the deal to retaliate against CNN for its critical coverage of him. He even retweeted an altered video of himself body-slamming a person with the CNN logo for a head.

The Justice Department, however, has stressed in recent weeks that it has proceeded with its investigation independent of White House interference. This rumored pressure was widely seen as an attempt by Trump to punish CNN.

Stephenson has said that DoJ's move "defies logic, and it's unprecedented", and that the deal had been on a good path until recently.

'Deals like this destroy democracy, ' he said at the time. The programming runs the gamut from the DC superhero movie universe and the hit series "Game of Thrones", to NCAA's March Madness and major deals for National Basketball Association and MLB broadcasts. Web TV services are cheaper than traditional cable. They also don't fundamentally change behavioral incentives for the company, and they require ongoing enforcement.

In a press release, Delrahim said that a combined AT&T-Time Warner would "greatly harm American consumers" by hiking television bills and hampering innovation, particularly in online television service.

That latter charge - the suggestion that a vertical merger could impede newer competition from online video distributors - is a place the government has never gone before.

David McAtee, AT&T's general counsel, said: "Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market". Delrahim criticized the Obama administration's approval of similar mergers like Comcast's purchase of NBC Universal in 2011. On top of that, there could also be an inquiry into whether 21st Century Fox's Rupert Murdoch, a Trump confidant and suitor of Time Warner, played any behind-the-scenes role in the block of the merger. Comcast ultimately dropped its attempted acquisition. "Regardless of speculation about political environment surrounding the transaction, the only thing the court will care about is whether the merger is a violation of the Clayton Act". Just last week, the Federal Communications Commission voted to dramatically loosen local media ownership laws, which will allow the conservative Sinclair Broadcasting to gobble up television and radio stations in the same markets.

Nevertheless, AT&T and Time Warner initially told investors they expected the deal to close quickly - particularly because it was in the hands of what they believed to be a merger-friendly, Republican-dominated Washington, D.C.

Quickly, though, anti-consolidation consumer groups, including Free Press, sided with some of AT&T's soon-to-be content competitors, like Starz, to rail against the deal. AT&T, however, says it plans to fight this in court. "We are confident that the Court will reject the Government's claims and permit this merger under longstanding legal precedent".