Reuters reports that the Department of Justice will soon file a lawsuit in an attempt to block AT&T's $86 billion acquisition of Time Warner. Reports had already suggested that the DOJ was considering such an action, and that it had given AT&T an ultimatum: either sell off DirecTV or CNN-owner Time Warner as part of the deal, or face a lawsuit. AT&T publicly stated it would do neither, bringing us to this point. The lawsuit could be announced as early as this week, though the DOJ may wait until after the Thanksgiving holiday to unveil it.
Some appear to believe that a Trump administration that has been gutting consumer protections and media consolidations hand over fist suddenly gives a damn about antitrust and vertical integration issues.
Others believe that Trump's disdain for CNN's critical coverage of his Presidency -- and Rupert Murdoch's fear of a bigger competitor to his News Corporation empire -- are much more likely explanations for the decision.
Additional reports indicate that AT&T lawyers are already planning a legal fight, and are exploring whether or not Murdoch played a role in getting the Trump administration to scuttle the deal. Murdoch had been urging the Trump administration to block the deal since at least January, while other outlets indicated that AT&T rebuffed at least two efforts by Murdoch to buy CNN from AT&T over the last six months.
Trump's disdain for CNN's coverage of his Presidency may also be playing a role in the DOJ's decision making. Trump DOJ antitrust boss Makan Delrahim was previously on record stating he saw no problems with the deal, a position that only changed recently. Trump has made no secret of his animosity toward the news network, and administration officials told the New York Times in July that it wanted to use the deal as "leverage" over the network. Cutting off funding from a deep-pocketed parent company like AT&T, or forcing AT&T to divest CNN to Murdoch who'd subsequently work to undermine the Fox News competitor, would both service those goals.
Most consumer advocates have criticized the deal, arguing that AT&T will undermine streaming video competitors by making it harder for them to license the content needed to compete with AT&T's own DirecTV Now streaming service. Given the Trump administration's frontal assault on net neutrality, privacy guidelines, media consolidation rules and every other consumer protection under the sun, it's a hard sell that consumer welfare is motivating the DOJ's assault on the deal.
Regardless of the motivation, AT&T has made it very clear it expects to fight the lawsuit in court.
Update: AT&T issued this statement shortly after the news broke:
quote:
"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."