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DOJ Files Lawsuit Challenging AT&T/Time Warner Merger

20 Nov, 2017 By: Erik Gruenwedel


AT&T CEO Randall Stephenson calls move troubling


The United States Department of Justice Nov. 20 filed an antitrust lawsuit to block AT&T’s proposed acquisition of Time Warner, contending the $85 billion acquisition would substantially lessen competition, resulting in higher prices and less innovation for consumers.

“It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” Assistant Attorney General Makan Delrahim of the DOJ’s antitrust division said in a statement.

Delrahim — a former lobbyist for Comcast before his appointment to the DOJ by President Trump — told media in Canada last year he saw no antitrust issues regarding the merger, which includes Time Warner assets Warner Bros., HBO and Turner. Apparently, he changed his mind.

“AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the DOJ is to seek an injunction from a federal judge blocking the entire transaction,” Delrahim said Monday.

Specifically, the government contends the combined companies could impede “disruptive competition” from online video distributors and the ability to charge more for Time Warner’s popular networks and take other actions to discourage future competitors from entering the marketplace altogether. 

“They have leverage over an online video distributor, whose offering would be ‘[expletive] without Turner,’” Delrahim said, citing an unnamed senior Time Warner executive.

The news clearly rattled AT&T CEO Randall Stephenson, who, in a conference call, said he was disturbed by the government’s action.

“We’re surprised to be here and candidly I’m a bit troubled by it,” he said. “This defies logic and is unprecedented. I’ve done a lot of deals in my career but I’ve never done one which I’ve disagreed with the Department of Justice on so many facts.”

Media scuttlebutt contends Trump is using the DOJ to interfere with the merger largely for political reasons. The president has been openly critical of CNN, characterizing the Turner-owned property “fake news.”

“There’s been a lot of reporting and speculation whether this is all about CNN,” Stephenson said. “And frankly I don’t know. Nobody should be surprised the question keeps coming up.”

David McAtee, senior EVP and general counsel at AT&T, said the merger would make television more affordable, innovative, interactive and mobile.

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” McAtee said. “We see no legitimate reason for our merger to be treated differently. Fortunately, the Department of Justice doesn’t have the final say in this matter.”
 

 


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