DOJ sues to block AT&T-Time Warner merger

Politicians advocacy groups cautiously praise AT&T lawsuit

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The government demands AT&T and Time Warner be permanently enjoined from carrying out the proposed merger.

It looks like "Game of Thrones" and the "Justice League" may not be heading to AT&T after all.

The U.S. Justice Department is poised to sue to block AT&T's $85.4 billion takeover of Time Warner, according to a person familiar with the matter, culminating more than a week of sparring over the deal and dealing a major blow to the carrier's bid to create a media and telecommunications empire, Bloomberg News' Sara Forden and David McLaughlin report. Time Warner is the media giant behind movie studio Warner Bros., premium cable channel HBO and the TV stations under Turner Broadcasting, including CNN.

"The combined company will use its control of Time Warner's popular and valuable networks to hinder its rivals, forcing them to pay hundreds of billions of dollars more per year for the right to distribute those networks", a senior DOJ official said. The combination would result in higher cable bills, the agency said. Deals like AT&T's proposed purchase of Time Warner are called vertical mergers because they don't wipe an existing competitor out of the marketplace. "We see no legitimate reason for our merger to be treated differently", said McAtee.

The lawsuit is a blow to the quest by AT&T, the No. 2 wireless phone company in the United States by number of subscribers, to transform itself into an entertainment powerhouse, not only delivering your favorite shows to your phone or home television but also creating them.

AT&T runs the country's second largest wireless network and is the biggest provider of traditional satellite and cable TV services.

In April, the AT&T chief had stated that the deal was "moving along as expected" and looking towards a positive outcome.

The consumer advocacy group Free Press likewise praised the DOJ action, but its president, Craig Aaron, objected to President Trump's "saber-rattling" against CNN and other outlets that air criticism of the administration. The Department of Justice has made a decision to go forward with a lawsuit to block the merger.

'Deals like this destroy democracy, ' he said at the time.

Stephenson has said that DoJ's move "defies logic, and it's unprecedented", and that the deal had been on a good path until recently. A DOJ official, speaking on condition of anonymity in order to discuss a pending legal case, said Monday that the government is still willing to work with AT&T on "structural relief", or selling off assets. "We're in it to win it". A White House spokeswoman said Monday she wasn't aware of any efforts to influence the case.

DOJ lawsuits often sound the death knell for a deal.

AT&T vows that it will defeat the Justice Department in court. The last time the USA government won a court victory in a vertical merger antitrust case was in 1972, when the Supreme Court said Ford's takeover of a spark-plug business violated antitrust law.

A source who confirms the DOJ's move to Politico said that that the government's main sticking point is CNN, which has become perhaps the most prominent of the president's media punching bags.

First published November 20 at 1:32 p.m. PT. Update, 2:55 p.m. PT: Added comment from DOJ.

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