Justice Dept. sues to block pay-TV deal

But AT&T ‘confident’ its TW buyout will proceed

The Justice Department sued to block AT&T’s $85.4 billion grab for Time Warner, a deal that would combine satellite TV service DirecTV and premium pay channel HBO under one corporate roof, a match-up the U.S. government says would give its parent too much power.

A merged AT&T and Time Warner would have the marketplace power to force rival pay-TV providers to pay hundreds of millions of dollars more annually per year for the right to distribute its networks, said the suit filed in U.S. District Court for the District of Columbia.

That pricing leverage and the company’s massive presence could also discourage competition from newcomers, the suit says.

AT&T said it is ready to go to court and is “confident” it will prevail in its acquisition of Time Warner.

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” said David McAtee, AT&T general counsel and senior executive vice president. “We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.”

The Justice Department says the combination of the largest U.S. pay-TV provider and No. 2 wireless carrier with a media company that includes Turner Broadcasting (CNN, TBS, TNT, Turner Classic Movies and TruTV), HBO and Warner Bros. film studio puts too much connectivity and content under one umbrella.

“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,” Assistant Attorney General Makan Delrahim of the department’s antitrust division said in a statement announcing the legal move.

AT&T shares closed Monday up 0.38% to $34.64, while Time Warner shares were down 1.1% to $87.71.

SAUL LOEB/AFP/GETTY IMAGES