The Department of Justice cites antitrust concerns.
AT&T’s deal to buy Time Warner is in jeopardy.
It looks like “Game of Thrones” and the “Justice League” may not be heading to AT&T after all.
The Department of Justice is suing to block AT&T’s pending acquisition of Time Warner, the company behind movie studio Warner Bros, HBO and TV stations under Turner Broadcasting, which includes CNN, saying the $85 billion deal would concentrate too much power in one company. Having control over popular networks, the DOJ said, would allow AT&T to charge its competition more for the right to distribute its popular programming.
“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,” the DOJ said in a statement. The combination would result in higher cable bills, the DOJ said.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” AT&T General Counsel David McAtee said in a statement. “We see no legitimate reason for our merger to be treated differently.”
A dead deal could mean AT&T has to explore other potential acquisitions at a time when entertainment and telecom companies are looking at their own combinations.
The White House didn’t immediately respond to a request for comment.
DOJ lawsuits often sound the death knell for a deal. AT&T, however, says it plans to fight this in court.
“We are confident that the Court will reject the government’s claims and permit this merger under longstanding legal precedent,” AT&T’s McAtee said.
Critics argue the deal would give AT&T too much power, since much of the entertainment produced would go to competitors like Verizon and the cable providers.
“While reports of political pressures regarding this deal are concerning, the fact remains that there are serious, legitimate reasons this merger should be blocked,” said Jonathan Schwantes, senior policy counsel for Consumers Union. “We are pleased the DOJ is moving forward with this suit in order to protect consumer interests.”
AT&T and Time Warner are holding a conference call at 2:30 p.m. PT to discuss the state of the merger.
A DOJ representative wasn’t immediately available to comment on the report.
