The Justice Department will file a lawsuit seeking to block the $85 billion merger of AT&T and Time Warner, Bloomberg reported Monday afternoon.
The deal, announced last October, would create a media behemoth with assets including the Warner Bros. studio, CNN, HBO, the Turner networks, AT&T’s wireless business and DirecTV. However, President Donald Trump has taken aim at the mega-merger on the campaign trail and repeatedly branded CNN as “fake news.”
The Financial Times reported earlier this month that AT&T would have to sacrifice CNN to gain antitrust approval for the deal, which AT&T Chairman and CEO Randall Stephenson declined he had proposed or had been asked to do. New antitrust chief Makan Delrahim said in October that the deal did not pose a “major antitrust problem,” but his thinking has evidently shifted.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” David R. McAtee II, Senior Executive Vice President and General Counsel, AT&T Inc., said in a statement. “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,” McAtee continued. “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 an investor conference earlier this month, AT&T CFO John Stephens said that while he still expects the deal to go through, the finish line is not imminent.
“All approvals have been received, but for the [Department of Justice],” Stephens said. “We are in active discussions with the DOJ. Those are continuing on. I can’t comment on those discussions, but with those discussions, I can now say that the timing of the closing of the deal is now uncertain.”
“With regard to the transaction, everything continues as we’ve expressed in the past,” he continued. “If you look at this vertical merger, you can see that these types of mergers bring benefits to customers, and have very routinely been approved by the DOJ and the federal government. In fact, a vertical integration — vertical merger like this hasn’t been blocked for over 40 years.”