The US Justice Department sued AT&T on Monday to block its proposed $85.4 billion takeover of CNN parent company Time Warner in a landmark antitrust move that prevents the world's largest telecommunications provider from merging with the world's third-largest entertainment firm.
AT&T had been waiting for Justice Department approval for the deal, though recent negotiations had clearly faltered, resulting in Monday’s lawsuit. Earlier in the day, the Justice Department said it would make a significant antitrust announcement, but did not say what it would be about.
The proposed acquisition of Time Warner, which owns HBO, CNN, and Warner Bros., has drawn the scrutiny of the Justice Department and fueled allegations that the Trump administration may be more interested in forcing the sale of CNN than protecting consumers from antitrust concerns. Previously, multiple outlets reported that the government had asked AT&T to sell either Turner Broadcasting, which owns CNN, or satellite television provide DirecTV in order to proceed with the takeover.
“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 in a statement. He added that the combination of AT&T or DirecTV with Time Warner would be "unlawful."
Monday's lawsuit was filed in a US district court in Washington, DC.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” said AT&T general counsel David McAtee II in a statement. “Vertical mergers like this one are routinely approved because they benefit customers without removing any competitor from the market.”
President Donald Trump has regularly disparaged the 24-hour cable news channel, calling it “fake news.”
"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," Trump said at a campaign speech in Oct. 2016. In July, the president tweeted a doctored video showing him wrestling a person, edited to represent CNN, to the ground on July 2, 2017, writing “#FraudNewsCNN #FNN.”
For his part, AT&T CEO Randall Stephenson has previously said that he didn’t think CNN would be an impediment to the deal’s closure. He previously met with the president at a White House event in June, where he was complimented by Trump for “doing a really top job.”
“I don’t know what the relevance is of CNN to an antitrust review,” Stephenson said in October at Vanity Fair’s New Establishment Summit in Los Angeles.
It was widely reported that Justice Department officials told AT&T executives they had to sell Turner Broadcasting, which owns CNN, or sell DirecTV, a satellite television provider that AT&T bought for $48.5 billion in 2014, in order for the deal to go through.
“Fortunately, the Department of Justice doesn't have the final say in this matter,” said McAtee II. “Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law.”