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The US Department of Justice (DOJ) is launching an antitrust lawsuit against AT&T in an effort block its proposed $85 billion takeover of Time Warner.
DOJ officials say the proposed deal would harm competition, increase prices for consumers, and reduce innovation in the media industry.
Time Warner’s network portfolio includes HBO, CNN, TBS, TNT, and Cinemax, among others, and according to the DOJ’s case, the “combined company would abuse its control to hinder its rivals by forcing them to pay hundreds of millions more per year for the rights to distribute those networks.”
“The only appropriate action is to seek an injunction from a federal judge to block the merger,” a DOJ official said. When pressed, the DOJ said the antitrust action was in no way influenced by the White House or President Donald Trump’s ongoing feud with CNN.
In a statement, AT&T said it was “confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.”
AT&T first announced plans to buy Time Warner last October in what would be one of the largest mergers in American history. At the time, AT&T said the combined company would strive to become the first US mobile provider to compete with cable companies nationwide with bundled mobile broadband and video. The telco also said the deal would usher in new forms of original content built for mobile and social platforms.
“This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” said AT&T chairman and CEO Randall Stephenson in a statement at the time the merger was announced.
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Despite scrutiny from US antitrust regulators, a handful of super-sized media mergers have succeeded over the last several years. AT&T acquired DirecTV in 2015 for $49 billion to become the nation’s largest pay-TV subscriber. As for Time Warner, the media conglomerate is known for its ill-fated merger with AOL, which marked the end of the dot-com bubble and is widely considered one of the worst acquisitions ever. Time Warner Cable, a separate company, merged with Charter Communications in 2015.
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