DoJ Sues to Block AT&T/Time Warner

As threatened, US government is moving to block the AT&T/TW deal after AT&T refuses to divest of either DirecTV or Turner Broadcasting.

Alan Breznick, Cable/Video Practice Leader, Light Reading

November 20, 2017

2 Min Read
DoJ Sues to Block AT&T/Time Warner

AT&T's proposed $85 billion takeover of Time Warner has now run into a brick wall, with the US Department of Justice suing this evening to block the merger.

As reported by Reuters and other news outlets, the DOJ antitrust division is moving to block the deal after AT&T Inc. (NYSE: T) rejected the US government's proposals to divest itself of its DirecTV unit or Turner Broadcasting assets. AT&T CEO Randall Stephenson had said his company would fight the government in court if the DoJ sought to stop the deal or make AT&T sell off those properties. (See DoJ May Fight AT&T-TW Deal – Report and DOJ Brings Timeline Trouble to AT&T-TW Deal.)

Backing up Stephenson's threat, AT&T criticized the DoJ late Monday for seeking to block a vertical merger, which would be an unusual move for the government because vertical mergers don't raise typical antitrust issues. Speaking to Reuters, AT&T lawyer David McAtee called the lawsuit "a radical and inexplicable departure from decades of antitrust precedent." McAtee said AT&T sees "no legitimate reason for our merger to be treated differently."

Adding weight to AT&T's argument is the fact that the government approved the Comcast Corp. (Nasdaq: CMCSA, CMCSK) acquisition of NBCUniversal just a few years ago. In theory, the DOJ could make the argument that AT&T has a national distribution footprint while Comcast has just a regional one, and thus the AT&T deal is a greater threat to competition. However, given the convergence of the cable market and the eventual likelihood of national or near-national reach of cable companies, that case seems questionable. (See Does AT&T Deserve Time Warner?)

Both President Trump and key Democratic lawmakers have come out against the deal but for vastly different reasons. While Trump has mostly lashed out at coverage of him by Time Warner's CNN channel, Democrats and public interest groups have warned that the deal would lead to higher prices, fewer choices and worse service for consumers.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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