Justice Department Sues to Block AT&T-Time Warner Merger
The Justice Department sued to block AT&T’s $85.4 billion bid for Time Warner, warning the deal could mean higher monthly TV bills and fewer options for American consumers.
1 The DOJ Moves to Block the Deal
In an attempt to curb corporate power, the Justice Department sued to block AT&T’s $85.4 billion bid to buy Time Warner Cable. If the sale were to go through, the merger would create a media and telecommunications giant. AT&T is already one of the largest telephone and internet providers. After it acquired DirecTV in 2015, it became the largest television distributor as well.
2 Why Antitrust Regulators Object
According to the DOJ, this merger violates anti-trust law. “This merger would greatly harm American consumers,” Makan Delrahim, the assistant attorney general for antitrust, said in a statement. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”
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.
3 AT&T Vows to Fight in Court
AT&T said it would fight this move in court. Claiming that “it defies logic, and it’s unprecedented,” AT&T chief executive Randall L. Stephenson. According to AT&T, the government has not challenged a similar merger in many years. In fact, in 2011, the former administration approved a similar sale: Comcast’s acquisition of NBCUniversal.
Some are speculating that this move by the Trump administration is a direct result of President Trump’s personal feud with CNN, but the Justice Department claims that the reason for its opposition is that “AT&T / DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner’s networks, and it would use its increased power to slow the industry’s transition to new and exciting video distribution models that provide greater choice for consumers.” The complaint states that “the proposed merger would result in fewer innovative offerings and higher bills for American families.”
4 The Risk of Too Much Power Over Content
When the deal was first proposed in October of 2016, critics called it “an unhealthy concentration of power between a distributer and a maker of content.” What made the deal even more frightening to some critics is that mobile carriers have much more control over how video gets to consumers’ smartphones. Companies like AT&T and Verizon have zero-sponsored data programs where companies can pay a fee to exclude their services from a data cap. This gives carriers too much power to decide which services are free, thereby pushing consumers in a certain direction.
5 What It Means for Consumers
Whether or not this deal goes through remains to be seen. The benefit and cost of this merger to consumers is debatable, and largely depends on whose perspective you get. No matter what the outcome, Billshark’s only wish is that consumers win.
