U.S. Sues to Block $85.4 Billion Merger Between AT&T and Time Warner

WASHINGTON — The Justice Department on Monday sued to blockAT&T’s $85.4 billion bid for Time Warner, setting up a showdown over the first blockbuster acquisition to come before the Trump administration.

By challenging the deal, the Justice Department is taking a starkly different approach to antitrust issues than the Obama administration did. In 2011, for instance, the department approved a similar deal — Comcast’s acquisition of NBCUniversal — after imposing numerous conditions on the transaction.

If the deal were to go through, the combined companies would form a media behemoth. By itself, AT&T is one of the nation’s largest internet and telephone providers. With its 2015 acquisition of DirecTV, the country’s largest satellite company, it also became the largest television distributor in the United States.

With the huge amount of content from Time Warner, the combined media company would have a tremendous ability to reach consumers through news and entertainment programming. Among Time Warner’s properties are HBO, the home to “Game of Thrones”; Warner Bros., the studio that has produced blockbusters like “Wonder Woman” and the Harry Potter film series; and Turner Broadcasting, which includes the news channel CNN and the sports-heavy TNT network.

Makan Delrahim, the Justice Department’s top antitrust regulator, said the department opposed the deal on the grounds that the combination of the two companies would not be in the public interest.

“This merger would greatly harm American consumers,” Mr. Delrahim, the assistant attorney general for antitrust, said in a statement. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”

Jeffrey L. Bewkes, the chief executive of Time Warner, left, and Randall L. Stephenson, AT&T’s chief executive, speaking last year before a Senate subcommittee hearing on the AT&T-Time Warner merger.CreditJoshua Roberts/Reuters

The complaint was filed in Federal District Court for the District of Columbia.

A Justice Department official, who spoke on condition of anonymity, citing the sensitive nature of the talks, said that the agency remained open to negotiating a settlement. To gain favor with the antitrust division, the official said, the companies involved would have to sell off some of their assets.

AT&T said it would defend the proposed deal in court.

“Today’s D.O.J. lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” AT&T’s general counsel, David R. McAtee, said in a statement. “We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.”

By moving to block the deal, the Justice Department embarked on perhaps its boldest effort to stop a merger since another AT&T transaction: the telecom giant’s effort to buy T-Mobile in 2011.

AT&T — led then, as it is now, by Randall L. Stephenson — had sought to gain scale by purchasing a smaller telecom competitor. The Justice Department, operating under the Obama administration, said that the proposed transaction would have drastically reduced competition in the market for wireless phone services.

Executives at AT&T and Time Warner have argued that its proposed acquisition of Time Warner is a different animal, given that the two companies — unlike AT&T and T-Mobile — are not rivals competing in the same sphere.

AT&T has said it would vigorously defend the deal, arguing that the union would not reduce competition in the broadband or other media markets. Instead, the company said, it would create a company better equipped to fight powerful internet rivals such as Facebook and Google in the digital advertising and streaming market. In addition to its reach as a creator of content and as a distributor, the union of AT&T and Time Warner would also create a powerful player in mobile video streaming and advertising.

In an interview earlier this month at The Times’s DealBook conference, Mr. Stephenson said that a significant merger like this had not been challenged in 40 years. He added that the company had been preparing to litigate its case since “Day 1.”


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