DOJ Argues AT&T Should Sell DirecTV or Turner if Time Warner Deal Goes Through

Would give AT&T too much power in carriage negotiations, U.S. government says in post-trial brief

The U.S. Department of Justice argued that should AT&T’s planned acquisition of Time Warner get approval, the satellite provider should be forced to sell off either DirecTV or Turner.

The government made the argument in its post-trial brief that was unsealed on Tuesday, according to Reuters.

Judge Richard Leon is planning to make his ruling on the case, whose trial wrapped last week, by June 12, ahead of the merger’s June 21 deadline. 

The DOJ’s main arguments in the brief were that if AT&T owned Time Warner it would give it too much power over carriage fee negotiations with DirecTV competitors and cheaper, live TV streaming packages, even going so far as suggesting that AT&T could withhold those channels.

“The evidence demonstrated that the bulk (though not all) of the anticompetitive effects flow from the combination of Turner with DirecTV,” the Justice Department said in Tuesday’s brief, according to Reuters. The government estimated the increased cost to industry rivals at $580 million a year, which it argued should be deemed illegal and stop the deal.

The DOJ’s brief echoes its closing argument from the trial, where Justice Department attorney Craig Conrath argued for “alternative” solutions should the deal go through, including AT&T only purchasing a portion of Time Warner.

The telecom giant offered to buy Time Warner for $85.4 billion in late 2016, but the deal has been in limbo ever since, with the U.S. government suing to block the deal last fall. AT&T and Time Warner have argued similar “vertical mergers” have been met with little resistance by the Justice Department in the last 40 years.

Shares of AT&T were down Tuesday afternoon, dipping a little more than 1 percent to $31.68 per share. Time Warner, after opening at $92.35 per share, is virtually steady at $92.36 per share.