US justice department blocks AT&T’s bid to acquire Time Warner
WASHINGTON: The US Department of Justice sued AT&T Inc on Monday to block its $85.4-billion acquisition of Time Warner Inc, saying the deal could raise prices for rivals and pay-TV subscribers while hampering the development of online video.
The Justice Department is arguing that AT&T would use Time Warner’s films and movies to force rival pay-TV companies to pay “hundreds of millions of dollars more per year for Time Warner’s networks” in the lawsuit filed late Monday in federal court in Washington.
The government cited documents where AT&T and its satellite broadcast unit DirecTV described the traditional pay-TV model as a “cash cow” and “golden goose,” suggesting customers were at risk of price hikes.
The 23-page complaint also said the deal would slow the industry’s transition to online video and other new distribution models.
AT&T, which sees the deal as a way to compete against emerging technology companies such as Netflix Inc and Amazon.com Inc’s Prime Video, described the lawsuit as “a radical and inexplicable departure from decades of antitrust precedent.”
AT&T head lawyer David McAtee said vertical mergers, between companies on different steps in a supply chain, are routinely approved. “We see no legitimate reason for our merger to be treated differently,” said McAtee, adding that AT&T is confident a judge will reject the Justice Department’s case. The Obama administration approved a similar vertical deal in 2011 to allow cable company Comcast Corp to acquire NBC Universal.