The U.S. Department of Justice is suing AT&T to block its merger with Time Warner. The suit was filed in federal court Monday, with the DOJ saying this merger goes against U.S. antitrust law because AT&T would “use its control of Time Warner’s popular programming as a weapon to harm competition.” (TVNewser)
The legal challenge was expected after AT&T rejected a demand by the Justice Department earlier this month to divest its DirecTV unit or Time Warner’s Turner Broadcasting—which contains news network CNN—in order to win antitrust approval. (HuffPost / Reuters)
The litigation is likely to focus on antitrust law and may touch on the motivations for the lawsuit, as President Trump has been a frequent critic of Time Warner-owned CNN. Makan Delrahim, the Justice Department’s antitrust chief, said the lawsuit was triggered by concerns over competition, and has denied there has been any White House influence in the merger proceeding. (Variety)
In a call with reporters Monday, a Justice Department official said the agency remained open to negotiating a settlement. To gain favor with the antitrust division, the official said, the companies would have to sell off some of their assets. In its complaint, the Justice Department said consumers would most likely face higher prices for cable or satellite television subscriptions because AT&T would be able to charge more for licensing of valuable programming like the NCAA men’s basketball tournament, which is broadcast in large part on Turner networks. (NYT / DealBook)
For its part, AT&T sharply rejected the U.S. government’s claims. “Fortunately, the Department of Justice doesn’t have the final say in this matter,” said David R. McAtee II, the company’s general counsel, in a statement. “Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law. We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.” (Recode)