AT&T to Fight DOJ Over Time Warner
November 21, 2017
The U.S. Justice Department is suing to stop AT&T's multi-billion dollar
bid to take over another communications giant, Time Warner, calling it
illegal and likening it to extortion.
"The $108 billion acquisition would substantially lessen competition,
resulting in higher prices and less innovation for millions of
Americans," a Justice Department statement said Monday.
"The combined company would use its control over Time Warner's valuable
and highly popular networks to hinder its rivals by forcing them to pay
hundreds of millions of dollars more per year for the right to
distribute those networks."
David R. McAtee II, Senior Executive
Vice President and General Counsel, AT&T said, “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."
Donald Trump has made no secret of his contempt for one of Time Warner's
crown jewels — CNN, the Cable News Network — because of his perception
of CNN being a liberal biased provider of "fake news," including direct
attacks against his administration.
“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.”
CNN, HBO top Time Warner products
Time Warner's products include CNN, HBO, TNT, The Cartoon Network, and
Cinemax — these networks broadcast highly popular newscasts, movies,
comedy and drama series, and sports.
AT&T and its subsidiary DirectTV distribute these programs, as well as
others, thorough cable and satellite.
The Justice Department decries the possibility of AT&T not just
controlling television productions, but also the means of bringing them
into people's homes.
In its lawsuit, it threw AT&T's words right back at the communications
giant, noting that AT&T recognizes that distributors with control over
the shows "have the incentive and ability to use ... that control as a
weapon to hinder competition."
It also cited a DirectTV statement saying distributors can withhold
programs from their rivals and "use such threats to demand higher prices
and more favorable terms."
Assured transaction would be approved
AT&T's CEO Randall Stephenson told reporters the Justice Department's
lawsuit "stretches the reach of anti-trust law to the breaking point."
He said the "best legal minds in the country" assured AT&T that the
transaction would be approved and said the government is discarding
decades of legal precedent.
AT&T and Time Warner are not direct competitors, and AT&T says
government regulators have routinely approved such mergers.
Trump vowed during last year's presidential campaign to block the
Stephenson called the matter "the elephant in the room," saying he said
he "frankly does not know" if the White House disdain for CNN is at the
heart of the Justice Department lawsuit.
But he said a proposal that Time Warner sell-off CNN as part of a
settlement with the Trump Justice Department would be a "non-starter."