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DoJ Sues to Block AT&T/Time Warner

Alan Breznick
11/20/2017

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

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Phil_Britt
Phil_Britt
11/27/2017 | 7:21:09 PM
Re: Huh...
Agree that they may not be entirely competent, but if the deck is stacked enough, it may not matter.
KBode
KBode
11/27/2017 | 6:55:23 PM
Re: Huh...
Well they are stacked, but there's not a whole lot of indicators that they're entirely competent. We'll see. AT&T lawyers are, again, pretty brutal. And if they can disclose that Rupert Murdoch is driving this unfairly they could have a big leg up.
Phil_Britt
Phil_Britt
11/24/2017 | 11:33:34 AM
Re: Huh...
Wether AT&T is right or wrong, seems doubtful it can win a case against a "stacked" government, particularly when the executive branch is doing everything it can to influence the judicial branch.
KBode
KBode
11/22/2017 | 7:41:38 PM
Huh...
This case should be a real page turner. On one hand you've got a President that likely just wants the deal blocked to help RUpert Murdoch and harm CNN, with AT&T on the other side trying to insist that becoming a massive lumbering media titan will result in wonderful, miraculous benefits for consumers. Should be truly entertaining.
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