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US sues to block AT&T-Time Warner mega-merger

Anti-trust enforcers set up major court battle over the $85b tie-up

Image Credit: AP
AT&T Chairman and CEO Randall Stephenson, left, and Time Warner Chairman and CEO Jeffrey Bewkes are sworn in on Capitol Hill in Washington, prior to testifying before a Senate Judiciary subcommittee hearing on the proposed merger.

Washington: AT&T said Monday that US antitrust enforcers filed suit to block its merger with Time Warner, setting up a major court battle over the $85 billion (Dh312 billion) tie-up.

The deal announced more than a year ago would merge vast content of Time Warner units like premium cable channel HBO and news channel CNN with the massive internet and pay TV delivery networks of AT&T.

The statement from AT&T came ahead of an expected announcement from the US Justice Department.

Critics of the deal have said it would give too much power over the media industry to a single firm and enable AT&T to withhold key content from rivals or raise prices.

AT&T reaffirmed its plans to challenge the government’s lawsuit, arguing that it was seeking a “vertical” merger without competitive overlap.

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

“Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently.”

McAfee added: “We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.”

The deal has also stirred up political concerns: Reports earlier this month said the government was prepared to approve the deal if AT&T would divest CNN, which has been a frequent target of President Donald Trump, who has attacked the network as “fake news.”

Last week, AT&T chairman and chief executive Randall Stephenson said his firm is prepared for a court fight, while ruling out a sale of CNN or other content providers.

Stephenson said he would have preferred a negotiated settlement with the Justice Department, but that any deal would not involve the divesting of CNN or the HBO premium video channel.

That is because AT&T - one of the largest telecom and pay TV operators - wants to boost its ability to marry content and advertising and better compete with the likes of Facebook, Google and Netflix.

“That’s where the synergies come from,” Stephenson said in response to a question on whether he would sell CNN or other Time Warner content assets.

AT&T has also argued its merger would mirror a similar merger between cable giant Comcast and media-entertainment group NBCUniversal, which won approval with certain conditions.

But last week, the Justice Department’s antitrust chief Makan Delrahim said in a speech he wanted to avoid “behavioural” remedies in mergers, stating “antitrust is law enforcement, it’s not regulation.”

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