The Department of Justice is suing to block AT&T from acquiring Time Warner

Shawn Knight

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Rumors surfaced earlier this month suggesting the Department of Justice was laying the foundation for an antitrust lawsuit to block AT&T’s $85.4 billion acquisition of Time Warner. On Monday, the litigation came to fruition.

The development serves as a major blow to a deal that’s been in the works for more than a year. Bloomberg first reported on the news earlier in the day.

The proposed merger was announced in October 2016. The goal, among other things, is to give AT&T more leverage in the rapidly changing entertainment landscape by allowing them to bundle mobile services with video products. Time Warner, as you may know, owns Turner Broadcasting System, Warner Bros and HBO, thus serving as a significant influencer in the production and broadcasting space.

According to Bloomberg, the deal appeared to be headed toward approval as early as a month ago. That, however, was before new US antitrust Makan Delrahim came into power and took over the investigation. Delrahim apparently encouraged AT&T to sell its Turner broadcasting arm or DirecTV but the company declined.

Delrahim said in a statement today that the merger would greatly harm American consumers, adding that it would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.

David R. McAtee II, Senior Executive Vice President and General Counsel, AT&T Inc., responded to the lawsuit:

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently."

“Our merger combines Time Warner’s content and talent with AT&T’s TV, wireless and broadband distribution platforms. The result will help make television more affordable, innovative, interactive and mobile. Fortunately, the Department of Justice doesn’t have the final say in this matter. 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.”

AT&T intended on closing the deal by the end of 2017 but given the DoJ hurdle, that now seems unlikely.

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Uncle Al

Posts: 7,379   +5,802
Have to say it's a good call, just hope they can hold them back. While cable cutters are having an impact, the cable suppliers just don't get the Supply & Demand formula and continue to rape their users despite all the indications they are starting to fade. Maybe the Justice Dept. can sit them down and explain this? LOL
 
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psycros

Posts: 3,186   +3,371
Have to say it's a good call, just hope they can hold them back. While cable cutters are having an impact, the cable suppliers just don't get the Supply & Demand formula and continue to rape their users despite all the indications they are starting to fade. Maybe the Justice Dept. can sit them down and explain this? LOL
If only they had stood up to the biggest offender, Comcast. But that was a different justice department. Oh, and I always get a LOL when they roll out this old chestnut:

"Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently."

See, in the land of doublespeak buying a competitor isn't "removing a competitor from the market". Sort of like how selling weapons-grade uranium to Russia isn't a threat to national security.
 
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wiyosaya

Posts: 5,361   +3,444
Have to say it's a good call, just hope they can hold them back. While cable cutters are having an impact, the cable suppliers just don't get the Supply & Demand formula and continue to rape their users despite all the indications they are starting to fade. Maybe the Justice Dept. can sit them down and explain this? LOL
I agree this is a good start. However, I think the powers that be in the industry are in for a big surprise, and are running scared. Perhaps the marketplace will teach them all a lesson. Personally, I cannot wait to see what happens to Disney's streaming service if or when they hit the market. Perhaps it will be foreshadowed by how well The Last Jedi does after Disney announced their money grab plans with its release. I had planned on seeing it in the theater, but not any more. As I see it, Disney has just proven themselves the latest company to move to the dark side with brand-name arrogance. We have seen arrogant companies fall before; IMO, it is likely to happen again.

Sort of like how selling weapons-grade uranium to Russia isn't a threat to national security.
Personally, I think you are comparing oranges to mustard seeds with this. If weapons grade uranium had been sold to Russia, the comparison would be substantially better.