The U.S. Department of Justice (DoJ) has launched a suit against AT&T, arguing that the telecom carrier would use Time Warner's content to force rival pay-TV companies to pay much more for Time Warner's networks.
The United States Department of Justice filed a civil antitrust lawsuit to block AT&T/DirecTV's proposed acquisition of Time Warner Inc. "The $108 billion acquisition would substantially lessen competition, resulting in higher prices and less innovation for millions of Americans," the DoJ claims.
According to the complaint, which was filed in the United States District Court for the District of Columbia, the combined company "would use its control over Time Warner's valuable and highly popular networks to hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for the right to distribute those networks. "
AT&T Inc. is the largest telecommunications company in the world. AT&T is also the country's largest Multichannel Video Programming Distributor (MVPD), with more than 25 million subscribers. It has three pay-TV offerings: (1) DirecTV, a satellite-based product with almost 21 million subscribers that it acquired through a merger in 2015; (2) U-Verse, a product which uses the local AT&T fiber optic and copper network and has almost 4 million subscribers; and (3) DirecTV Now, its new online video product with almost 800,000 subscribers. In 2011, AT&T attempted to purchase T-Mobile, but abandoned the transaction after the Department of Justice filed suit alleging that the merger violated the antitrust laws.
As of 2016, according to Time Warner, its most popular networks reach over 90 million households - of the nearly 100 million households that subscribe to traditional subscription television.
The United States' second largest wireless carrier offered to buy Time Warner in October last year to gain control of cable TV channels HBO and CNN, and film studio Warner Bros as well as a number of other coveted media assets.
Aside from the Trump administration, the deal is also opposed by an array of consumer groups and smaller television networks.
AT&T has rejected DoJ demands that it sell DirecTV or Time Warner's Turner Broadcasting - which includes news network CNN - in order to win antitrust approval.
AT&T said the lawsuit was "a radical and inexplicable departure from decades of antitrust precedent".
The company says it plans to ask the Washington court dealing with the case for the earliest possible hearing, hopefully within 60 days, as the current merger agreement expires on April 22, 2018.