After several flashes of its fangs, the Trump administration is now going for the stranglehold on AT&T’s $85.4 billion buyout of media giant Time Warner.
Bloomberg reports that the Department of Justice has filed a lawsuit against the telco, the first one in decades that will attempt to block the combination of two companies from different industries.
“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, the department’s antitrust chief, at a press conference today.
“The government contends that AT&T, with 25 million TV customers, and Turner, with a single-digit share of all media watched, will have unlawful market power,” said AT&T CEO Randall Stephenson at a joint press conference with Time Warner, owner of Turner Media. “This defies logic and it is unprecedented.”
Suppliers like Time Warner and distributors like AT&T usually are able to merge without legal scrutiny. Legal analysts say the Justice Department, which will have to prove that the acquisition will harm marketplace competition, is going against precedent with this action.
In criticizing the media as “fake news,” Donald Trump has shoved multiple lances at Time Warner-owned CNN for its coverage of him. There have been whispers that the Department of Justice asked AT&T to sell CNN in exchange for its approval of the takeover. Stephenson denied that such a proposition was made, but did say that he would fight to keep the cable news channel.
AT&T may request for communication logs between the White House and the Justice Department as evidence in case there is a trial. However, the it could also continue to work with the Justice Department to get a green light for the deal.
Verizon has acquired media companies and built up a subsidiary called Oath to supply pipeline service customers with its own media. AT&T has been able to wrangle retransmission agreements through its ownership of DIRECTV to sideload with its pipeline services — but having content it can call its own would be perceived as better for customer value and for returns.