Justice Department Lawsuit to Block AT&T Merger Is the Right Decision

Justice headquarters building in Washington

The US president, Donald Trump, has objected to the deal for some time, mentioning it in his presidential campaign, and has been a vocal critic of liberal news network CNN, which is owned by Time Warner.

President Trump has often complained on Twitter (TWTR) about CNN's political coverage, raising questions over the Justice Department's actions. Subsequent reports from Reuters and Politico confirmed the news.

Stephenson called CNN the "elephant in the room" and admitted that he didn't know if the lawsuit was because of the network. Turner Broadcasting holds valuable sports broadcasting rights in addition to news channel CNN.

The Justice Department said it plans to make a major antitrust announcement Monday afternoon, without specifying the topic. He also said the lawsuit "defies logic and is unprecedented". Indeed Delrahim himself, prior to his appointment at the DoJ, argued exactly that and opined that there shouldn't be much objection to this deal in the interview with BNN below.

Stephenson said AT&T will not be party to any agreement that would "even give the perception of compromising the First Amendment" and promised AT&T and Time Warner would not give up control of CNN, either directly or indirectly.

Of course any mega-merger raises competition concerns, but this one was supposed to be OK because it's "vertical" - i.e. AT&T is buying into another industry rather than snapping up one of its own competitors. AT&T says its pay TV and wireless businesses do not compete with Time Warner's entertainment offerings.

"Time Warner Cable was regional" - limited to territories where it had a license to operate - "and AT&T is national", they would explain.

Daniel Petrocelli, AT&T's retained counsel from O'Melveny & Myers, continually said today that the burden now falls to the DOJ to prove the merger will harm consumers.

The DoJ said its case was based on fears AT&T would be able to charge rival distributors "hundreds of millions of dollars more per year" for Time Warner's programming payments that would ultimately get passed down to consumers through their cable bills.

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.

And now the DOJ is making the same argument itself - pointing out that Comcast is also a regional pay TV distributor, and federal regulators were anxious enough about its acquisition of NBCUniversal* to create a long document full of restraints regulating Comcast's behavior. With AT&T's subscriber data, it had planned to provide targeted advertising.

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