The deal was announced a year ago
The U.S. government filed a lawsuit to block the merger of mobile operator AT&T with Time Warner – one of the world’s largest conglomerates of news and entertainment profile.
The deal, worth $ 85 billion, it was announced over a year ago. AT&T wants to buy Time Warner, which owns, in addition to Turner Broadcasting, HBO and Warner Bros, with the goal of integrating its mobile services with the service of viewing videos. It will compete with Facebook and Google in the online advertising market.
“Such a merger would cause great harm to the American consumers. This would mean higher monthly bills for watching TV channels and a smaller number of new, innovative ways in which consumers begin to enjoy,” said makan Delrahim, head of the antitrust division of the justice Department.
Delrahim said AT&T with my satellite provider is DirecTV and Time Warner content “will have the incentive and ability to charge more for the popular network Time Warner and take other actions to prevent future competitors actually enter the market”.
Critics of the deal said that it will give too much power in the media industry one company and will allow AT&T to retain key content from competitors or to raise prices.
At&T announced its intent to dispute the claim, saying that the company was trying to make a “vertical” merger, and not “horizontal”.
“Today’s lawsuit of the Ministry of justice is a radical and unexplained departure from decades of antitrust practice,” said the General attorney, AT&T David McAfee.
“Vertical mergers such as these are regularly approved because they benefit the consumers, not removing competitors from the market. We see no legitimate reason for our merger was considered otherwise”.
McAfee added: “We are confident that the court will reject the government’s demands and allowed the merger based on previous experience.”
The deal also caused political tensions: in the beginning of this month it was reported that the US government is ready to approve the deal if AT&T will refuse to purchase CNN, which has often come under attack from Donald trump, who called news channel “fake news.”
During the election campaign, trump has vowed to block the merger.
Last week, the Chairman and CEO of AT&T Randall Stephenson said his company is ready for trial and has ruled out the sale of CNN or other content providers.
“I never offered to sell CNN and not going to do it,” – said the head of AT&T Randall Stephenson.
Stevenson said that he would prefer to resolve the situation through negotiations with the Ministry of justice, but noted that any deal will not be associated with the alienation CNN or HBO.
This is due to the fact that AT&T is one of the largest telecommunication operators and pay TV wants to increase their ability to combine content and advertising to better compete with Facebook, Google and Netflix.
AT&T also said that its merger similar to the merger of cable giant Comcast and media group NBCUniversal, which has received approval under certain conditions.
Gene Kimmelman of consumer group Public Knowledge welcomed the claim of the Federal government.
“Despite some disagreements about the political situation surrounding the transaction, the consolidation of media in General and this deal in particular, not in the interests of the American public,” said Kimmelman.
“The combined company will have the incentive and ability to harm competing distributors, threatening the competitive future of online video, giving the new company the opportunity to refuse content or to raise prices for other satellite and cable players.”
BTIG Research analyst Richard Greenfield said that the transaction Comcast-NBCU could “poison the water” for AT&T, noting that there is a perception that Comcast has expanded the interpretation of their agreements with users.
“There can be no doubt that the justice Ministry is concerned about the transaction Comcast-NBCU,” said he.
“Unreasonable to assume that regulatory agencies were not concerned about vertical mergers in media and telecommunications in the past.”
“Although the Ministry of justice decided to approve the transaction Comcast-NBCU, it enacted a decree that for seven years, competitors and consumers were protected from the risks associated with this transaction”.