Igniting what could be a titanic court battle with political overtones, the Trump administration has filed suit to block AT&T’s proposed $105 billion takeover of Time Warner in a rare challenge of a “vertical” merger between different kinds of companies.
The complaint filed by the Department of Justice on Monday paints a picture of AT&T combining the distribution muscle it has as owner of DirecTV with control of Time Warner’s popular programming to force other distributors to “pay hundreds of millions of dollars more per year” for the rights to broadcast TNT, HBO, CNN and other networks.
AT&T general counsel David McAtee, however, called the suit “a radical and inexplicable departure from decades of antitrust precedent,” adding that vertical mergers have been “routinely approved because they benefit consumers without removing any competitor from the market.”
The No. 2 wireless carrier is preparing to go to court and has said it is willing to use the legal process to unearth communications between White House and antitrust officials over the case.
“If such evidence is uncovered, analysts say, AT&T could argue that Trump abused his position as president to carry out a politically motivated attack against a private actor,” the Washington Post said.
As Reuters reports, the merger has been a “political lightning rod since it was hatched in October 2016,” with Trump repeatedly attacking CNN for its coverage of his campaign. AT&T rejected the Justice Department’s demand earlier this month to divest DirecTV or Time Warner’s Turner Broadcasting — which contains CNN — in order to win antitrust approval.
The DoJ warned that the combination of AT&T and Time Warner would create a vertically integrated programmer that would have “the additional leverage to charge its rival video distributors higher prices for its networks than Time Warner’s current market power would otherwise allow.”
“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,” Assistant Attorney General Makan Delrahim of the DoJ’s antitrust division said in a news release.