U.S. sues to block merger of media titans

The U.S. Justice Department Monday sued to block AT&T’s proposed $85 billion purchase of Time Warner, saying the proposed combination is illegal and could stifle innovation in technology.

“This merger would greatly harm American consumers,” Assistant Attorney General Makan Delrahim of the department’s Antitrust Division said Monday in a statement. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”

But the lawsuit, filed Monday in U.S. District Court in Washington, immediately raises questions about whether President Trump is using the nation’s top law enforcement agency to settle scores with perceived opponents. A high-level Justice Department official denied the allegation and suggested that AT&T is furthering a story that

Trump’s dislike of Time Warner’s CNN had undermined review of the transaction.

“I can understand why merger parties want to try to kick sand in the umpire’s eyes, but we are law enforcement,” this official, who spoke on the condition of anonymity, said in a call with reporters. “We have to go to court and we will prove our case.”

Trump has made no secret of his animosity toward CNN, one of the media assets that AT&T is hoping to buy. Trump frequently refers to CNN as “fake news” on Twitter, and last week he punctuated a tweet about CNN with the word “Loser!”

The suit sets the stage for a showdown that should determine whether the government can stop the wave of media consolidation. Traditional companies have been racing to bulk up to better compete against giants of technology, including Google, Facebook, Netflix and Amazon.

Analysts said it would be unprecedented for the government to try to block this type of combination.

AT&T is the nation’s second-largest phone company and largest pay-TV provider. It wants to add Time Warner’s entertainment properties, which also include HBO, TBS, TNT, Cartoon Network and the Warner Bros. movie and television.

AT&T said it would fight the government to keep the deal alive. But the lawsuit is a significant blow to the 132-year-old phone company, which has been banking on the deal to transform it into a 21st century entertainment powerhouse.

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” David R. McAtee II, AT&T’s general counsel said in a statement.