AT&T slams DoJ's 'inexplicable' lawsuit against Time Warner deal

U.S. government claims merger threatens to 'greatly harm' consumers

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AT&T late on Monday said it sees no legitimate reason to block its proposed merger with Time Warner, following the U.S. Department of Justice (DoJ)'s decision to file a lawsuit against the deal.

"Today's DoJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market," said David McAtee, senior EVP and general counsel at AT&T, in a statement.

The comment was made in response to the DoJ's announcement that it has filed an antitrust suit against the proposed $84.5 billion tie-up, on the grounds that it threatens to stifle competition in the content market, resulting in less choice and higher bills.

Time Warner's vast content collection includes HBO; film and TV studio Warner Bros. Entertainment; and media conglomerate Turner, which owns the rights to broadcast NBA basketball. For its part, AT&T owns pay TV provider DirecTV and has extensive fixed and mobile broadband networks.

Explaining its lawsuit, the DoJ said the combination of Time Warner and AT&T would hinder rival TV players by forcing them to pay more to distribute Time Warner-owned content, and would also slow the transition to new and innovative distribution models, like streaming, for example.

"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," said assistant attorney general Makan Delrahim of the DoJ's antitrust division. "AT&T/DirecTV's combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction."

Unsurprisingly, consumer advocates welcomed the development.

"We welcome this effort by the Department of Justice to protect competition in the video industry," said Public Knowledge president Gene Kimmelman.

Contrary to AT&T's claim that the lawsuit goes against decades of precedent, Kimmelman pointed out recent examples of the government going to court to stop mergers between programmers and distributors.

"The Department of Justice filed suit to stop the Comcast-NBC Universal deal and a consent decree approved by a federal judge imposed conditions on that deal designed to protect competition," he said. "Likewise, the Federal Trade Commission (FTC) filed suit to block the acquisition of Turner Broadcasting by Time Warner (which was then both a cable TV company as well as a programmer) in 1996, reaching a settlement that prevented discrimination and required some divestitures."

AT&T's McAtee insisted that its Time Warner takeover will make television "more affordable, innovative, interactive and mobile.

"We are confident that the court will reject the government's claims and permit this merger under longstanding legal precedent," he said.