Government Sues to Block AT&T – Time Warner Merger

Logos used under the Fair Use Exemption.

AT&T’s transformation from a telecom provider to media distributor took a blow today as the Justice Department announced that it would sue to block its $85 billion acquisition of Time Warner from going forward. The Justice Department stated that if the merger proceeded, AT&T could be in a position to raise the prices its subscribers charge as well as the cost other cable distributors pay for Time Warner content. AT&T became a major media player previously with its acquisition of DirectTV.

AT&T fired back at the government, stating that acquisitions of vertical integrations are routinely approved and that the decision was at odds with longtime antitrust standards, saying it was “a radical and inexplicable departure from decades of antitrust precedent.”

AT&T also pointed to the Obama administration’s approval of Comcast and NBC Universal as establishing a precedent in favor of the merger.

Although the Justice Department denies, some have speculated that the Trump administration’s hostility to CNN, an asset owned by Time Warner, has played a role in the review.

Along with CNN, Time Warner owns premiere cable assets such as TNT, TBS, and HBO. It also owns the Warner Brothers movie studio. AT&T must now decide if the prize of Time Warner is worth a protracted legal battle with the United States government or whether it would be better to walk away. It is unlikely that AT&T would give in demands to sell either DirectTV or Turner Broadcasting (which includes TNT, TBS, and CNN.)

Time Warner had revenue of nearly $30 billion last year and operating income of $6.4 billion, while AT&T had revenue of $164 billion and operating income of $24 billion.


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