Justice Department Moves to Block AT&T-Time Warner Merger

The Justice Department filed a lawsuit against AT&T, aimed to block the company’s efforts to take over Time Warner Inc., The Wall Street Journal reports. AT&T Chief Executive Randall Stephenson said the suit “defies logic” and that the company would fight the case, the first major antitrust action under the Trump administration.

According to The Journal, few cases in recent memory have challenged “vertical” combinations that link companies in different parts of an industry. The government’s lawsuit claims this mega-deal would hurt consumers and competition because AT&T could wield its power to charge cable-TV rivals higher prices for HBO, Turner sports and other popular Time Warner programming.

The 23-page lawsuit, filed in a Washington, D.C. federal court, alleges the deal could have considerable negative ramifications even though AT&T and Time Warner aren’t traditional competitors. It says paid TV distributors continue to view Time Warner networks as essential components in any cable bundle. It also alleges that AT&T, which two years ago bought DirecTV, could use the deal to squeeze out new streaming services like Sling TV that could threaten its traditional pay-TV profits, The Journal adds.

“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” said Makan Delrahim, chief of the Justice Department’s antitrust division.

“I’ve done a lot of deals in my career but I’ve never done one where we have disagreed with the Department of Justice so much on even the most basic of facts,” AT&T’s CEO Stephenson noted.

AT&T’s deal for Time Warner was valued at $85 billion when it was announced in October 2016, just weeks before the presidential election, as one of the largest media deals ever. The outcome will determine the success of AT&T’s plans to transform itself into a media giant that combines a far-reaching internet and video distribution network with such sought-after content as Time Warner’s HBO and cable channels like CNN and TNT, The Journal writes.

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