WASHINGTON – The US government filed suit on Monday in federal court in the District of Columbia to prevent the merger of AT&T and the Time Warner media group, claiming that the operation would “harm American consumers” by reducing competition in the sector.
“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” said Assistant Attorney General Makan Delrahim, who is with the Justice Department’s Antitrust Division.
“AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction,” he said.
The agreement between the two companies, which is valued at about $108 billion, would have been one of the largest mergers in US history.
Among the various products that would have been subsumed under the accord are the CNN and TNT cable television stations, entertainment channels like HBO and Warner Bros. studios, as well as the rebroadcasting rights for the National Basketball League and baseball’s Major Leagues.
“We’re surprised to be here, and candidly I’m a bit troubled by it,” said AT&T chief executive Randall Stephenson during a webcast on Monday.
“The best legal minds in the country agreed this deal would be approved, and the government’s suit stretches the very reach of antitrust law beyond the breaking point,” he added.
In recent weeks, various media outlets had said that the Donald Trump administration had conditioned its approval of the merger on the sale of CNN, one of the jewels in Time Warner’s crown, and the DirecTV satellite channel, which is owned by AT&T.
The Justice Department is accusing Time Warner of having torpedoed the CNN sale by asking an exorbitant price for the news network.
Stephenson did not rule out the possibility that, in reality, the situation reflects the tense relationship between Trump and CNN, which the president often accuses of being a purveyor of “fake news,” especially when it is critical of him, saying during his presidential campaign that if elected he would reject any merger of the firms.
According to official figures, AT&T made profits of $163 billion in 2016, making it the world’s largest telecommunications company, while Time Warner last year made some $29.3 billion from its reach into more than 90 million homes in the US.