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The Department of Justice is suing to block AT&T from acquiring Time Warner

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Rumors surfaced earlier this month suggesting the Department of Justice was laying the foundation for an antitrust lawsuit to block AT&T’s $85.4 billion acquisition of Time Warner. On Monday, the litigation came to fruition.
Rumors surfaced earlier this month suggesting the Department of Justice was laying the foundation for an antitrust lawsuit to block AT&T’s $85.4 billion acquisition of Time Warner. On Monday, the litigation came to fruition.
The development serves as a major blow to a deal that’s been in the works for more than a year. Bloomberg first reported on the news earlier in the day.
The proposed merger was announced in October 2016. The goal, among other things, is to give AT&T more leverage in the rapidly changing entertainment landscape by allowing them to bundle mobile services with video products. Time Warner, as you may know, owns Turner Broadcasting System, Warner Bros and HBO, thus serving as a significant influencer in the production and broadcasting space.
According to Bloomberg, the deal appeared to be headed toward approval as early as a month ago. That, however, was before new US antitrust Makan Delrahim came into power and took over the investigation. Delrahim apparently encouraged AT&T to sell its Turner broadcasting arm or DirecTV but the company declined.
Delrahim said in a statement today that the merger would greatly harm American consumers, adding that it would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.
David R. McAtee II, Senior Executive Vice President and General Counsel, AT&T Inc., responded to the lawsuit:
“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.”
“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.”
AT&T intended on closing the deal by the end of 2017 but given the DoJ hurdle, that now seems unlikely.

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