The Department of Justice has filed a lawsuit to block AT&T’s purchase of Time Warner, a potential $85 billion deal granting the telecommunications giant access to major media brands including CNN, Warner Brothers, HBO and more.
Filing in the District Court for the District of Columbia, government lawyers claim the merger would allow companies under AT&T’s umbrella to control a disproportionate interest of both what individuals watch and how they watch it, meaning they could force both competitors and consumers to pay higher prices. AT&T owns satellite provider DirecTV, while Time Warner owns networks such as TBS, TNT, Cartoon Network and HBO.
“This merger would greatly harm American consumers,” said assistant attorney general Makan Delrahim. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”
AT&T general counsel David McAtee countered the lawsuit’s claims, saying the deal was a “vertical merger,” combining two companies that operate at separate stages of a production process. He also stated that the lawsuit was “a radical and inexplicable departure from decades of antitrust precedent.” Historically, vertical mergers are much more difficult for government officials to block.
The Department of Justice was forced to defend the lawsuit in light of several comments by President Donald Trump, criticizing cable news network CNN, which is owned by Time Warner. One executive at Turner Broadcasting said, “there isn’t any precedent. It’s one thing to say ‘Fake news!’, it’s another to reverse governmental policy because you object to a company’s journalism.” Trump has indicated several times he may attempt to thwart the merger, both during the presidential campaign and as president.
AT&T Chairman and CEO Randall Stephenson said he has no intention of selling CNN to win approval of the Time Warner merger.